AUDITED FINANCIAL STATEMENTS 2021

i NSSF Audited Financial Statements for 2021

AUDITED FINANCIALSTATEMENTS 2021For the year ending 30 June 2021

“Delivering a triumphant return amid a pandemic induced new normal – we rose up; sailed through the waves of change to make lives better for all”Workers House, NSSF Headquarters

TABLE OF CONTENTS

National Social Security Fund financial statements for theyear ending 30 June 2021

Fund information 1–2Report of the directors 3Statement of directors’ responsibilities 4–5Report of the independent auditor 6–8

CONTENTS

Statement of changes in net assets available for benefits 9Statement of net assets available for benefits 10Statement of changes in members’ funds and reserves 11Statement of cash flows 12Notes to the financial statements 13

FINANCIAL STATEMENTS

1 NSSF Audited Financial Statements for 2021

FUND INFORMATIONDIRECTORS

Dr. Peter Kimbowa Chairman (Appointed on 1 September 2021)Mr. Richard Byarugaba Managing DirectorMr. Patrick Ocailap MemberMr. Aggrey David Kibenge Member (Appointed 10 November 2020)Ms. Penninah Tukamwesiga MemberDr. Sam Lyomoki Member (Appointed on 1 September 2021)Mr. Bahemuka Julius Member (Appointed on 1 September 2021)Mr. Lwabayi Mudiba Hassan Member (Appointed on 1 September 2021)Mr. Fred K. Bamwesigye MemberDr. Silver Mugisha Member (Appointed on 1 September 2021)Mr. Patrick Byabakama Kaberenge Chairman (Appointment term ended on 31 August 2021)Mr. Peter Christopher Werikhe Member (Appointment term ended on 31 August 2021)Dr. Isaac E.W Magoola Member (Appointment term ended on 31 August 2021)Mr. D. Stephen Mugole Mauku Member (Appointment term ended on 31 August 2021)Mrs. Florence Namatta Mawejje Member (Appointment term ended on 31 August 2021)

REGISTERED OFFICE14th Floor, Workers HousePlot No. 1, Pilkington RoadP. O. Box 7140Kampala

AUDITORThe Auditor GeneralOffice of the Auditor GeneralApollo Kaggwa RoadP. O. Box 7083Kampala

DELEGATED AUDITORPricewaterhouseCoopersCertified Public Accountants10th Floor, Communications House1 Colville StreetP. O. Box 882Kampala, Uganda

Sebalu & Lule AdvocatesS&L ChambersPlot 14, Mackinnon RoadP. O. Box 2255Kampala, Uganda

Kampala Associated AdvocatesPlot 14, Nakasero RoadP. O. Box 9566Kampala, Uganda

GP Advocates(Formerly Omunyokol & Co. Advocates)Colline House, 3rd FloorPlot 4, Pilkington RoadP. O. Box 6737Kampala, Uganda

Kiwanuka & Karugire AdvocatesPlot 5A2, Acacia AvenueP. O. Box 6061Kampala, Uganda

Kasirye, Byaruhanga & Co. AdvocatesPlot 33, Clement AvenueP. O. Box 10946Kampala, Uganda

Nangwala Rezida & Co. AdvocatesPlot 9, Yusuf Lule RoadP. O. Box 10304Kampala, Uganda

ADVOCATES


Standard Chartered Bank Uganda LimitedSpeke RoadP. O. Box 7111Kampala, Uganda

Stanbic Bank Uganda LimitedPlot 17 Hannington RoadP. O. Box 7131Kampala, Uganda

Housing Finance BankPlot 25 Kampala RoadP. O. Box 1539Kampala, Uganda

Tropical Bank LimitedPlot 27 Kampala RoadP. O. Box 9485Kampala, Uganda

Bank of AfricaPlot 45 Jinja RoadP. O. Box 2750Kampala, Uganda

United Bank for Africa (Uganda) LimitedPlot 2, Jinja RoadP. O. Box 7396Kampala, Uganda

Ecobank Uganda LimitedPlot 4 Parliament AvenueP. O. Box 7368Kampala, Uganda

Finance Trust Bank LimitedPlot 121 & 115, Block 6, KatweP. O. Box 6972Kampala, Uganda

Exim Bank Uganda LimitedPlot 6, Hannington RoadP. O. Box 36206Kampala, Uganda

Orient Bank LimitedOrient Plaza No. 14 Kampala RoadP. O. Box 3072Kampala, Uganda

Post Bank Uganda LimitedPlot 4/6 Nkurumah RoadP. O. Box 7189Kampala, Uganda

Citibank Uganda LimitedPlot 4, Ternan Avenue NakaseroP. O. Box 7505Kampala, Uganda

Bank of Baroda Uganda LimitedPlot 18 Kampala RoadP. O. Box 7197Kampala, Uganda

Absa Bank Uganda LimitedPlot 2A & 4A, Nakasero RoadP. O. Box 7101Kampala, Uganda

dfcu Bank LimitedPlot 26, Kyadondo RoadP. O. Box 70Kampala, Uganda

Centenary Rural Development BankPlot 44-46 Kampala RoadP. O. Box 1892Kampala, Uganda

Diamond Trust Bank Uganda LimitedPlot 17/19, Kampala RoadP. O. Box 7155Kampala, Uganda

Equity Bank Uganda LimitedPlot 390, Muteesa Road KampalaP. O. Box 10184Kampala, Uganda

Guaranty Trust Bank Uganda LimitedPlot 56 Kiira RoadP. O. Box 7323Kampala, Uganda

KCB Bank Uganda LimitedPlot 7 Kampala RoadP.O. Box 7399Kampala, Uganda

NCBA Bank Uganda LimitedRwenzori TowersP. O. Box 28707Kampala, Uganda

BANKERS


REPORT OF THE DIRECTORS

The Directors submit their report together with the audited financial statements for the year ended 30 June 2021 which disclose the state of affairs of the National Social Security Fund (‘the Fund’ or “NSSF”), in accordance with Section 32 (Cap. 222) of the National Social Security Fund Act (‘NSSF Act’).

1. IncorporationThe Fund is a corporate body established by an Act of Parliament and is domiciled in Uganda and licensed as a Retirement Benefit Scheme under the Uganda Retirement Benefits Regulatory Act (2011).

2. Principal activityThe Fund was established by an Act of Parliament to provide for its membership, payment of contributions to, and payment of benefits out of the Fund. NSSF is a provident fund that pays out contributions in lump sum. It is open to all employees in the private sector including Non-Governmental Organizations that are not covered by the Government’s pension scheme. It is a scheme instituted for the protection of employees against the uncertainties of social and economic life. The Fund is financed by employees’ and employers’ contributions. The total contribution is 15% of the employees’ gross salary, of which the employer is entitled to recover 5% from the employee.

3. Results from operationsThe results of the Fund are set out on page 9.

4. Interest to membersInterest is computed based on the opening balances of the members’ funds less benefits paid during the year. The interest rate used to allocate interest for the year the year ended 30 June 2021 was 12.15% (2020: 10.75%).

5. Reserves and accumulated fundsThe reserves of the Fund and the accumulated member funds are set out on Page 11 and Page 53.

6. Unallocated members’ fundsThese are collections received from employers that have not yet been allocated to individual member accounts due to incomplete details of the members. Management has put in place mechanisms to continuously follow up the missing details from the employers to update the individual members’ accounts.

7. DirectorsThe Directors who held office during the year and up to the date of this report are set out on page 1.

8. AuditorsIn accordance with Section 32 (2) of the NSSF Act (Cap 222) Laws of Uganda, the financial statements are required to be audited once every year by the Auditor General of Uganda or an auditor appointed by him to act on his behalf. For the year ended 30 June 2021, PricewaterhouseCoopers Certified Public Accountants was appointed to act on behalf of the Auditor General.

9. Approval of the financial statementsThe financial statements were approved at the meeting of the Directors held on 17th September 2021.

By Order of the Board,

Ms Agnes Tibayeita IsharazaCORPORATION SECRETARY

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Uganda Retirement Benefits Regulatory Authority (URBRA) Act 2011 and Regulations require the Directors to make available to the Fund’s members and other parties, audited financial statements for each financial year which show a true and fair view of the state of affairs of the Fund as at the end of the financial year.

It also requires the Directors to ensure that the Fund keeps proper accounting records which disclose with reasonable accuracy the financial position of the Fund and safeguard the assets of the Fund.

The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, the URBRA Act and National Social Security Fund (NSSF) Act 1985; and, for such internal controls as directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The Board of Directors confirm that, during the year under review, in the execution of their duties they have complied with the requirements imposed by URBRA Act and the NSSF Act. The Directors also confirm that:

• Adequate accounting records were kept inclusive of proper minutes of all resolutions passed by the Board of Directors;• They took such steps as were reasonably open to them to safeguard the assets of the Fund and to prevent and detect fraud and

other irregularities;• Proper internal control systems were employed by or on behalf of the Fund;• Adequate and appropriate information was communicated to the members including their rights, benefits and duties in terms of

the rules of the Fund;• Reasonable steps to ensure that contributions, where applicable, were paid timely to the Fund;• Expert advice was obtained on matters where they lacked sufficient expertise;• The rules, operation and administration of the Fund complied with the URBRA Act and all applicable legislation; and,• Funds were invested and maintained in accordance with the Fund’s investment policy statement and Investment Regulations

issued by URBRA.

Approval of the annual financial statementsThe Directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with IFRS and the NSSF Act. The Directors are of the opinion that the financial statements give a true and fair view of the financial affairs of the Fund and its operating results.

The Directors ascertain that the auditor was given unrestricted access to all financial information and all representations made to them during their audit were valid and appropriate.

Notwithstanding the above-mentioned information, the Directors wish to draw attention to fact that the Fund did not appoint a fund manager for internally managed investments as required by section 60 (2) of the URBRA Act after undertaking a cost-benefit analysis which indicated that the internal risk controls were sufficient in that regard.

The financial statements for the year ended June 2020 have been restated to modify the presentation in line with the requirements of IAS 26, Accounting and Reporting for Retirement Benefit Plans.



Dr. Peter KimbowaCHAIRMAN

Mr. Richard ByarugabaMANAGING DIRECTOR

Dr Silver MugishaDIRECTOR

Date: 24 September 2021

STATEMENT OF DIRECTORS’ RESPONSIBILITIES (CONTINUED)

These financial statements:• were approved by the Board of Directors on17th September 2021;• are, to the best of the Directors’ knowledge and belief, confirmed to be complete and correct; and,• fairly represent the net assets of the Fund as at 30 June 2021 as well as the results of its activities for the year then ended in

accordance with IFRS.

In preparing the financial statements, the Directors have assessed the Fund’s ability to continue as a going concern. In performing this assessment, the Directors have considered the results of the Fund’s assessment of the possible impact on its cash flows and operations as a result of the macroeconomic impact of Covid-19 on the local Ugandan market and wider international economy that is disclosed in Note 44 of the financial statements. The Directors hereby report that nothing has come to their attention to indicate that the Fund will not remain a going concern for at least twelve months from the date of this statement.

The Directors confirm that for the year ended 30 June 2021, the National Social Security Fund has submitted all regulatory and other returns and any other information as required by the provision of the URBRA Act.

Nothing has come to the attention of the Directors to indicate that the Fund will not be able to meet its obligations and the requirements of the URBRA Act for the next twelve months from the date of this statement.

The new NSSF Board Chairman, Mr. Peter Kimbowa welcomes the Minister of Finance, Matia Kasaija at the 12th Board of Directors inauguaration.


REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NATIONAL SOCIAL SECURITY FUND FOR THE YEAR ENDED 30 JUNE 2021

The Rt. Hon. Speaker of Parliament

Our opinionI have audited the financial statements of National Social Security Fund (NSSF) which comprise the Statement of Net Assets Available for Benefits as at 30th June 2021 and the Statement of Changes in Net Assets Available for Benefits, Statement of Changes in Members’ Funds and Reserves and Statement of Cash Flows for the year then ended, and notes to the financial statements, includinga summary of significant accounting policies as set out on pages 9 to 72.

In my opinion, the financial statements present a true and fair view of the financial position of the Fund as at 30th June 2021, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Uganda Retirement Benefits Regulatory Authority Act and the NSSF Act.

Basis for opinionI conducted my audit in accordance with International Standards on Auditing (ISAs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Fund in accordance with the Constitution of the Republic of Uganda, 1995 (as amended), the National Audit Act, 2008, theInternational Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants (Parts A and B) and other independence requirements applicable to performing audits of Financial Statements in Uganda. I have fulfilled my other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performing audits in Uganda. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key audit matterKey audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. This matter was addressed in the context of my audit of the Fund’s financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. In addition to the matters described below to be the key audit matters to be communicated in my report. For each matter below, my description of how my audit addressed the matters is provided in that context.

I have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report, including in relation to these matters. Accordingly, my audit included performance of procedures designed to respond to my assessment of the risks of material misstatement of the financial statements. The results of my audit procedures, including the procedures performed to address the matters, provide the basis for my audit opinion on the accompanying financial statements.


REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NATIONAL SOCIAL SECURITY FUND FOR THE YEAR ENDED 30 JUNE 2021 (CONTINUED)

Details are outlined below:

Key audit matter How our audit addressed the key audit matter

Valuation of investment propertiesAs disclosed in Note 25 of the financial statements, the Directors used independent registered valuers to determine the fair values of investment properties amounting to Shs 852,506 million at 30 June 2021 (2020: Shs 725,470 million).

I considered this a key audit matter due to significant judgment exercised by the Directors and the complexity involved in the determination of the fair value of investment properties.

Specifically, significant judgement has been exercised in:

• determining the valuation techniques used by the external valuers i.e. discounted cash flow, cost approach and sales comparison method taking into consideration the effects of Corona Virus 2019 (Covid – 19) pandemic; and

• evaluation of the assumptions applied in determination of unobservable inputs such as comparable market prices, based on location of the property, projected future cash flows, future rent escalations, exit values and the discount rates relevant in determination of the fair value of investment properties

My audit procedures are summarised as follows:

I reviewed the Fund’s valuation reports for significant investments.

I evaluated the appropriateness of the valuation methodology applied by the Directors in the determination of fair value for consistency with IAS 40;

I tested the Director’s basis for valuation. On a sample basis, I recomputed the expected fair value of the investment property to form an independent judgement as to whether the valuation was in line with the Fund’s policy taking into consideration the expected impact of Covid-19 on various assumptions;

I tested the accuracy of the data used to derive unobservable inputs such as comparable market prices based on location of the property, projected future cash flows, future rent escalations, exit values and the discount rates and independently recomputed unobservable inputs on a sample basis to determine that they were derived in line with the Fund’s valuation policy;

I assessed the competence, objectivity and integrity of the independent valuers. I also reviewed their experience and professional qualifications and

I assessed the adequacy of the disclosures in the financial statements in accordance with IAS 40.

Based on my audit procedure undertaken above, I noted no significant issues in relation to Accounting for valuation of investment properties.

Other informationThe Directors are responsible for the other information. The other information comprises the information included in the Fund Information, the Director’s Report and the Statement of Directors’ Responsibilities, but does not include the financial statements and my audit report thereon.

My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work I have performed, I conclude that there is a material misstatement of the other information, I am required to report that fact. I have nothing to report in this regard.

Responsibilities of the Directors for the financial statementsThe Directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards, Uganda Retirement Benefits Regulatory Act, National Social Security Act and, for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so.

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NATIONAL SOCIAL SECURITY FUND FOR THE YEAR ENDED 30 JUNE 2021 (CONTINUED)

The Directors are responsible for overseeing the Fund’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statementsMy responsibility as required by Article 163 of the Constitution of the Republic of Uganda and Sections 13 and 19 of the National Audit Act, 2008 is to audit and express an opinion on these statements based on my audit. My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with ISAs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

Auditor’s responsibilities for the audit of the financial statements• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence

obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. My conclusion is based on the audit evidence obtained up to the date of my report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

John F.S MuwangaAUDITOR GENERAL24 September 2021



Note2021

UGX 000

Restated2020

UGX 000

CONTINUING OPERATIONSDealings with membersContributions received during the year 33 1,367,321,591 1,271,505,205Benefits paid 33 (642,324,102) (496,411,396)Net dealings with members 724,997,489 775,093,809

RevenueInterest income 5 1,605,409,548 1,398,768,129Real estate income 6(b) 15,419,002 11,125,662Dividend income 7 74,908,277 62,276,226Total revenue 1,695,736,827 1,472,170,017

Other income/ (losses)Fair value gains on investments 8(a) 433,255,407 84,314,499Foreign exchange losses 8(b) (302,220,865) (94,386,858)Other income 8(c) 9,838,826 156,533Total other income/ (loss) 140,873,368 (9,915,826)

ExpenditureAdministrative expenses 9 (124,917,354) (123,519,186)Impairment losses on financial assets 10 (2,273,274) (3,392,944)Other operating expenses 11 (26,914,803) (22,817,032)Amortisation of intangible assets 26 (1,667,461) (1,397,334)Depreciation on property and equipment and right of use assets 27 and 28 (7,005,698) (6,366,421)Total expenditure (162,778,590) (157,492,917)

Finance costs 12 (1,519,559) (1,216,029)

Surplus before income tax from continuing operations 13 2,397,309,535 2,078,639,054

Income tax expense 14(a) (167,428,279) (153,049,039)

Net increase in the fund for the year from continuing operations 2,229,881,256 1,925,590,015

DISCONTINUED OPERATIONSNet increase in the fund for the year from discontinued operations 30 465,032 588,563Net increase in the fund for the year 2,230,346,288 1,926,178,578

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS


Note2021

UGX 000

Restated2020

UGX 000

ASSETSCash and bank balances 15 80,835,813 26,022,095Deposits with commercial banks 16 204,709,471 203,157,273Trade and other receivables 17 71,148,444 52,961,898Equity securities externally managed 18 104,109,596 87,662,482Tax deposit receivable 14 (c) 25,323,522 25,323,522Debt instruments at amortised cost 19 11,556,221,300 10,016,837,661Equity investments internally managed 20 1,899,950,381 1,463,176,697Loans and advances 21 11,704,035 15,382,874Investment in associates 22 374,073,633 361,245,165Inventories 23 275,474,873 224,770,353Capital work-in-progress 24 13,610,044 7,200,225Investment properties 25 852,506,254 725,470,447Intangible assets 26 11,513,843 9,138,880Property and equipment 27 44,628,040 19,556,177Right of use assets 28 3,330,227 4,002,924Tax claimable 29 29,264,762 25,020,206Assets held for sale 30 728,000 16,631,516

TOTAL ASSETS 15,559,132,238 13,283,560,395

LIABILITIESOther payables 31 88,141,355 55,708,623Contract liabilities 32 9,020,690 9,911,421TOTAL LIABILITIES 97,162,045 65,620,044

MEMBER LIABILITIESAccumulated member’s funds 33 15,299,197,333 13,062,237,946Member reserve accounts 35 68,256,412 60,861,713Accumulated surplus 2,529,619 13,646,227

TOTAL MEMBER LIABILITIES 15,369,983,364 13,136,745,886

NET ASSETS 91,986,829 81,194,465Represented by:Fund reserves 91,986,829 81,194,465

These financial statements were approved for issue by the Board of Directors on 24 September 2021 and signed on its behalf by

___________________________ ______________________Mr. Peter Kimbowa Dr Silver MugishaCHAIRMAN DIRECTOR

__________________________Mr. Richard ByarugabaMANAGING DIRECTOR

STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS


STATEMENT OF CHANGES IN FUND RESERVES

Fund Reserves**UGX 000

TotalUGX 000

At 1 July 2019 70,258,323 70,258,323Special contributions received 10,936,142 10,936,142

At 30 June 2020 81,194,465 81,194,465

At 1 July 2020 81,194,465 81,194,465Special contributions received 10,792,364 10,792,364

At 30 June 2021 91,986,829 91,986,829

**Fund Reserves relate to accumulated special contributions received in accordance with Section 13 (1) and Section 14 (1) of the National Social Security Fund Act, (Cap 222).


STATEMENT OF CASH FLOWS

Note2021

UGX 0002020

UGX 000

Net cash flows used in operating activities 36 (102,834,902) 20,708,667

Investing activitiesPurchase of software 26 (3,978,591) (629,172)Purchase of property and equipment 27 (8,037,730) (7,922,449)Purchase of investment properties 25 (81,245,342) (486,240)Additions to capital work-in-progress 24 (6,904,532) (115,963,750)Purchase of equity investments internally managed 18 (186,731,555) (193,739,955)Purchase of equity investments externally managed 18 (6,370,470) (12,776,151)Proceeds from disposal of equity investments externally managed 18 1,265,715 7,020,097Purchase of debt instruments at amortised cost 19 (2,159,344,868) (1,910,816,202)Maturities of debt instruments at amortised cost 19 451,382,495 458,924,177Placement of deposits with commercial banks 16 (175,128,211) (656,066,104)Maturities of deposits with commercial banks 16 175,627,748 598,317,434Maturities of loans and advances 21 3,753,923 3,666,667Interest received from debt instruments at amortised cost 19 1,388,626,625 1,034,884,756Interest received from loans and advances 21 1,667,244 2,282,243Interest received from commercial bank deposits 16 16,826,312 19,157,530Increase in investment in associate 22 (808,313) (31,557,500)Dividends received 9,844,685 3,462,817Net cash flows used in investing activities (579,554,865) (802,241,802)

Financing activitiesRepayment of principal amount lease liabilities 30 (1,006,252) (1,058,374)Benefits paid out to members 33 (642,324,102) (496,411,396)Contributions received from members 33 1,367,321,591 1,271,505,205Interest recovered on arrears 33 2,419,884 4,943,492Special contributions received 34 10,792,364 10,936,142Net cash flows generated from financing activities 737,203,485 789,915,069

Increase in cash and cash equivalents 54,813,718 8,381,934Cash and cash equivalents at the beginning of the year 26,022,095 17,640,161Cash and cash equivalents at 30 June 14 80,835,813 26,022,095


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

1. Fund informationNational Social Security Fund (the “Fund”) is a corporate body domiciled in Uganda. The Fund is primarily involved in collection of contributions and investment of the contributions in a professional manner to earn a good return to meet the benefit obligations to its members as stipulated under the National Social Security Fund Act (Cap 222). The address of the Fund’s registered office is:

14th Floor, Workers HousePlot No. 1, Pilkington RoadP. O. Box 7140Kampala, Uganda.

The Fund is a defined contribution scheme which is open to all employees in the private sector, with a total contribution of 15% of the employees’ gross salary (employer contribution 10%, employee contribution 5%).

During the year ended 30 June 2021, the Fund paid benefits to 29,914 beneficiaries (2020: 21,726 beneficiaries). According to the NSSF Act (Cap. 19), the benefits paid out of the Fund include:

• Age benefits - payable to a member who has reached the retirement age of 55 years;• Withdrawal benefits - payable to a member who has attained the age of 50 years, and is out of regular employment for one year;• Invalidity benefits - payable to a member who because of illness or any occurrence develops incapacity to engage in gainful

employment;• Survivors benefits – payable to the dependant survivor(s) in the unfortunate event of member’s death;• Emigration grants – payable to a member (Ugandan or Expatriate) who is leaving the country for good. Such a member must

have been contributing for a minimum of four financial years; else will have to forfeit the 10% employer contribution; and,• Exempted employment benefits – payable to a contributing member who joins employment categories that are exempted i.e.

have their social protection schemes that are recognised under the existing law and are exempted from contributing to NSSF e.g. the army, police, prison, civil service and government teaching service employees or members of any scheme who have received exemption from the Minister responsible for Social Security in writing.

As part of reforms whose objective is a liberalised and regulated retirement benefits sector. Government of Uganda enacted the Retirement Benefits Regulatory Authority Act in September 2011. The law established the Uganda Retirement Benefits Regulatory Authority (URBRA) whose function is to regulate all retirement schemes including NSSF. The Fund has a valid operating license (Licence No. RBS 0002) issued by URBRA in line with UBRA Act.

In March 2018, Cabinet approved the National Social Security Fund Amendment Bill 2018.This Bill was tabled before Parliament in 2019. The amendment seeks to permit the fund continue as a national scheme and the sole recipient of mandatory contributions for the country’s working population. The amendment also seeks to provide for mid-term access to benefits, and bring on board new products including education, maternity, housing, health and unemployment.

The Fund is also listed in Class 1 of the Public Enterprises Reform and Divestiture Act as an entity in which the Government of Uganda (GoU) shall retain 100% control and/or ownership.

2. Basis of preparationThe financial statements of the Fund have been prepared in accordance and compliance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) and fulfilment of the requirements of the NSSF Act.

The financial statements have been prepared on a historical cost basis except as otherwise indicated below. The financial statements are presented in Uganda Shillings (UGX), which is the Fund’s functional currency, and all values are rounded off to the nearest thousand (UGX 000), except where otherwise indicated.

3. Summary of significant accounting policiesThe principal accounting policies set out below have been applied consistently to all periods presented in the financial statements.


3. Summary of significant accounting policies (continued)a) Investment in associatesAssociates are all entities over which the Fund has significant influence but not control or joint control. This is generally the case where the Fund holds between 20% and 50% of the voting rights of the underlying entity. Investments in associates are initially recognised at cost and subsequently measured at fair value. Where the measurement of fair value is not possible due to absence of quoted prices in an active market, the Fund applies its share of net assets in the associate as derived using the equity method of accounting as a proxy to fair value. Under the equity method, the carrying amount of the investment is adjusted to recognise changes in the Fund’s share of the net assets of the associate since the acquisition date. Changes in the Fund’s share of net assets are recognised in the statement of changes in net assets available for benefits.

b) Foreign currencies

The Fund’s financial statements are presented in Uganda Shillings, which is also the Fund’s functional currency.

Transactions in foreign currencies during the year are translated into Uganda Shillings at the exchange rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into Uganda Shillings at the exchange rates ruling at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to Uganda Shillings at the date when the fair value was determined.

Foreign currency gains and losses arising from settlement or translation of monetary items are recognised in the statement of changes in net assets available for benefits.

c) Revenue recognitionRevenue from contracts with customersRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the revenue can be reliably measured, regardless of when the payment is received. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and other sales taxes or duty.

Sale of propertiesThe Fund develops and sells residential properties. Revenue is recognised at a point in time when legal tittle has passed to the buyer.

The Fund has arrangements for full or partial prepayment of consideration under its standard property sale contracts. A contract liability for the advance payment is recognised at the time of cash receipt. Revenue is recognised when the property sale is concluded as described above.

Contract balances

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Fund performs by transferring properties to a customer before payment is due, a contract asset is recognised for the earned consideration.

(i) Significant financing componentGenerally, the Fund receives accepts advance rent payment from its customers. Using the practical expedient in IFRS 15, the Fund does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less.

Trade receivables

A receivable represents the Fund’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in Note 3 (d) Financial instruments – initial recognition and subsequent measurement.


3. Summary of significant accounting policies (continued)c) Revenue recognition (continued)(i) Significant financing component (continued)

Contract liabilities

A contract liability is the obligation to transfer goods or services to a customer for which the Fund has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Fund transfers goods or services to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Fund performs under the contract.

Interest income/ expense

Interest income and expense on all interest-bearing instruments are recognised using the effective interest method in statement of changes in net assets available for benefits.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts financial instruments estimated future cash payments or receipts through its expected life or, where appropriate, a shorter period to the net carrying amount. When calculating the effective interest rate, the Fund estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

The difference from the previous carrying amount is booked as a positive or negative adjustment to the carrying amount of the financial asset or liability on the balance sheet with a corresponding increase or decrease in interest income/ expense calculated using the effective interest method.

Dividends

Dividends on equity investments are recognised as income in the statement of changes in net assets available for benefits when the right of payment has been established, which is generally after declaration of dividends and approval by the shareholders of investee companies.

Rental income

Rental income from investment properties is recognized in the statement of changes in net assets available for benefits on the straight-line basis over the term of the lease.

Other income

Other income relates to fair value gains and losses related to equity instruments and investment in associates. It also includes gains from disposal of the Fund’s assets.

Financial instruments – initial recognition and subsequent measurementA financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.


3. Summary of significant accounting policies (continued)d) Financial instruments(i) Financial assets

Initial recognition and measurement

Financial assets are recognised when the Fund becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognised on trade-date, being the date on which the Fund commits to purchase or sell the asset.


At initial recognition, the Fund measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value, transaction costs that are incremental and directly attributable to the acquisition or issue of the financial asset, such as fees and commissions. Transaction costs of financial assets carried at fair value are expensed in statement of changes in net assets available for benefits. After initial recognition subject to increase in credit risk, an expected credit loss allowance (ECL) is recognised for financial assets measured at amortised cost.

For a financial asset to be classified and measured at amortised cost or fair value, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Fund’s business model for managing financial assets refers to how it manages its financial assets to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

The financial assets are subsequently measured at fair value with the exception of government securities and fixed bank deposits which are subsequently measured at amortised cost This treatment reflects the fact that these instruments are used to match the obligations of the Fund.

The amortised cost is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.

The Fund’s financial assets comprise of the following:

• Cash and cash equivalent (Note 15)• Debt instruments at amortised cost (Note 19)• Equity instruments (Notes 18 and 20)• Loans and advances (Note 21)• Trade and other receivables (Note 17)• Deposits with commercial banks (Note 16)

Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

• The rights to receive cash flows from the asset have expired; or• The Fund has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash

flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Fund has transferred substantially all the risks and rewards of the asset, or (b) the Fund has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Fund has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership.


3. Summary of significant accounting policies (continued)d) Financial instruments (continued)(i) Financial assets (continued)

Derecognition (continued)

When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Fund continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Fund also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Fund has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Fund could be required to repay.

Impairment of financial assets

Further disclosures relating to impairment of financial assets are also provided in the following notes:

• Disclosures for significant assumptions (Note 39)• Debt instruments at amortised cost (Note 19)• Loans and advances (Note 21)• Trade and other receivables (Note 17)• Deposits with commercial banks (Note 16)

The Fund recognises an allowance for expected credit losses (ECLs) for all financial assets that are measured at amortised cost. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Fund expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Fund applies a simplified approach in calculating ECLs. Therefore, the Fund does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Fund is applying a single loss-rate approach to receivables or groups of receivables as might be appropriate based on its average historical loss rate.

Depending on the data, the Fund applies either of two ways of computing the loss rate per period. A loss rate is computed as the ratio of outstanding invoice beyond the default period and invoices raised at the beginning of each period. Currently invoices raised majorly relate to rental space occupied by the tenants on the Fund’s lettable properties.

In case of payments on the outstanding invoices, the recovery rate is computed as a ratio of payments made on bills raised per time period before the default date. The loss rate is then obtained as 1 – recovery rate. A common approximation is to cap recovery rates at 100% where payments exceed invoice amounts. The single loss rate is adjusted for forward-looking factors specific to the debtors and the economic environment. The single loss rate estimates are applied to each category of gross receivables.

The Fund considers whether ECLs should be estimated individually for any period-end receivables, e.g. because specific information is available about those debtors.

The Fund has applied the single loss rate approach to all other financial assets recognised as other receivables e.g dividends receivable.

For all other financial instruments, the Fund recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12 month ECL.


3. Summary of significant accounting policies (continued)d) Financial instruments (continued)(i) Financial assets (continued)

Impairment of financial assets (continued)

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast,12 month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within12 months after the reporting date.

The Fund considers a financial asset to have low credit risk when the asset has external credit rating of investment grade’ in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has a strong financial position and there is no past due amounts.

Financial assets are written off either partially or in their entirety only when the Fund has no reasonable expectation of recovering a financial asset in its entirety or a portion thereof. If the amount to be written off is greater than the accumulated loss allowance, the difference is first treated as an addition to the allowance that is then applied against the gross carrying amount. Any subsequent recoveries are credited to the statement of changes in net assets available for benefits.

(ii) Financial liabilities


Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities (other than financial liabilities at fair value) are added to or deducted from the fair value of the financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial liabilities at fair value are recognised immediately in the statement of changes in net assets available for benefits.

Subsequent measurement

The Fund’s payables majorly relate to amounts due to contractors for works done on property developments and amounts due to other suppliers of goods and services consumed in day to day operations of the Fund.

Other payables are carried at amortised cost, which approximates the consideration to be paid in the future for goods and services received.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Changes in Net Assets Available for Benefits.

Offsetting

Financial assets and liabilities are offset and the net amount reported in the statement of net assets available for benefits when there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

e) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability; or• In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market is usually accessible by the Fund.


3. Summary of significant accounting policies (continued)e) Fair value measurement (continued)

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

Where the market price of a financial asset is not observable the Fund applies a valuation model to estimate the fair value at the reporting date.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Fund uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 – quoted (unadjusted) market prices in active markets for identical assets or liabilities.• Level 2 – valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or

indirectly observable• Level 3 – valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Fund determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Fund’s management investment committee determines the policies and procedures for recurring fair value measurement of investment properties. The management investment committee delegates the role of selection/ determination of involvement of the external valuers to a valuation committee which is comprised of the real estate manager, finance manager, procurement manager and legal officer.

External valuers are involved for valuation of significant assets, such as investment properties. Selection of external valuers is determined every two years by the valuation committee and after discussion with and approval by the contracts committee and the accounting officer. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

Valuers are normally rotated at each round of valuation with no single valuer performing consecutive valuations. The valuation committee decides, after discussions with the Fund’s external valuers, which valuation techniques and inputs to use for each case.

Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed, are summarized in the following notes:

• Disclosures for valuation methods, significant estimates and assumptions – Note 4 and 39;• Quantitative disclosures of fair value measurement hierarchy – Note 41;• Financial instruments (including those carried at amortised cost) – Notes 15,16, 17, 18, 20 and 40;• Investment property – Note 25; and• Capital work in progress – Note 24.

f) Property and equipment

Property and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.


3. Summary of significant accounting policies (continued)f) Property and equipment (continued)

Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the most recently assessed standard of performance of the existing asset will flow to the Company and the renovation replaces an identifiable part of the asset. Major renovations are depreciated over the remaining useful life of the related asset.

Changes in the expected useful life are accounted for by changing the depreciation period or methodology, as appropriate, and treated as changes in accounting estimates.

Depreciation is calculated to write off the cost of items of property and equipment less their estimated residual values using the reducing balance method over their estimated useful lives and is generally recognised in surplus or deficit.

The estimated annual depreciation rates for the current and comparative periods are as follows:

Percentage

Machinery 20 %Motor vehicles 20 %Furniture and equipment 12.5 %Computer equipment and other electronic gadgets 25%-33%

Depreciation commences once the asset is capitalized and is ready for use as intended by management and ceases on the day of derecognition.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

An item of property and equipment and any significant part initially recognised is derecognised upon disposal, when the fund loses control of the asset or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in other operating income in the statement of changes in net assets available for benefits when the asset is derecognised.

Land and buildings, which represent that portion of mixed-use properties that is owner occupied, are subsequently measured at fair value with changes in fair value recognised in the statement of changes in net assets available for benefits and depreciation measured to write down the post valuation amount over the remaining useful life of the property.

g) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of changes in net assets available for benefits in the expense category consistent with the function of the intangible asset. There are no intangible assets with indefinite useful lives.

Intangible assets are amortised at a rate of 10% p.a.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of changes in net assets available for benefits when the asset is derecognised.


3. Summary of significant accounting policies (continued)

h) Investment properties

Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property.

Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. All of the Fund’s property interests held under operating leases to earn rentals or for capital appreciation purposes are accounted for as investment properties and are measured using the fair value model. Gains or losses arising from changes in the fair values of investment properties are included in surplus or deficit in the period in which they arise, including the corresponding tax effect.

Investment properties are derecognised either when they have been disposed of (i.e., at the date the recipient obtains control) or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in surplus or deficit in the period of derecognition. The amount of consideration to be included in the gain or loss arising from the derecognition of investment property is determined in accordance with the requirements for determining the transaction price in IFRS 15.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. When the use of property changes from owner occupied to investment property, the property is re-measured at fair value and reclassified as investment property.

Right-of-use assets that meet the definition of investment property are presented as investment property.

i) Inventories

The Fund’s inventories comprise of completed housing units for sale and housing units for sale that are under development. Inventories are initially recognised at cost and remeasured to fair value at each reporting date.

j) Impairment of non-financial assets

The carrying amounts of the Fund’s non-financial assets other than investment properties, inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If such condition exists, the asset’s recoverable amount is estimated and an impairment loss recognised in surplus or deficit whenever the carrying amount of an asset exceeds its recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

Impairment losses are recognised in the statement of changes in net assets available for benefits in expense categories consistent with the function of the impaired asset.

An assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Fund estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount or exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of changes in net assets available for benefits.



k) Employee benefits(i) GratuityThe Fund’s terms and conditions of employment provide for gratuity to qualifying employees equivalent to 20% of the monthly salary per year of service to the organisation. This employment benefit is accrued on a monthly basis and paid annually in arrears. The provision in the financial statements takes account of service rendered by employees up to the reporting date and is based on the calculated staff benefits payable.

(ii) Staff provident fundThe Fund operates a defined contribution plan for all qualifying employees with contributions being made by the employees and a portion by the fund on behalf of each employee. The contributions payable to the plan are in proportion to the services rendered to the Fund by the employees and are recorded as an expense under ‘staff costs’ in the statement of changes in net assets available for benefits. Unpaid contributions are recorded as a liability.

l) ProvisionsA provision is recognised if, as a result of a past event, the Fund has a present legal or constructive obligation that can be estimated reliably and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Where the Fund expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

m) Income taxIncome tax expense comprises current tax and change in deferred tax. Income tax expense is recognised in surplus or deficit.

Current tax is provided for on the surplus for the year adjusted in accordance with the Ugandan Income Tax Act. Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.

Deferred tax is provided for using the liability method, for all temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the and reporting date. However, if the deferred tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable surplus or deficit, it is not accounted for. In respect of temporary differences associated with investments in subsidiaries and associates, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses to the extent that it is probable that taxable surplus will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable surplus will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable surplus will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of accounts receivable or accounts payable in the statement of net assets available for benefits.



n) Cash and cash equivalents

Cash and cash equivalents in the statement of net assets available for benefits comprise cash at banks and on hand and short-term highly liquid deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash and bank balances and short-term highly liquid deposits in form of mobile money balances (as disclosed in Note 15 that are available on demand as at the reporting date.

o) Capital work-in-progress

Capital work in progress (CWIP) relates to ongoing capital projects of investment or operational nature. Additions to capital work in progress are initially recognised at cost and subsequently measured at fair value.

p) Members’ funds

The Fund is funded through contributions from members and investment income.

(i) The Fund recognises a liability to pay benefits to members composed of contributions declared on the account of each member and interest accumulated on each account in accordance with the obligations laid out in the NSSF Act.

(ii) Interest is allocated to each members’ account at the rate declared by the Minister for each member in consultation with the Board of Directors each year, and is recognised in the statement of net assets available for benefits.

(iii) Interest payments to members

Interest payable on members’ accumulated contributions is calculated based on the opening accumulated contributions (standard contribution plus interest) less benefits paid during the year. The effective interest rate used to compute interest accrued to members is approved by the Minister of Finance, Planning & Economic Development in accordance with Section 35 (1) and (2) of the National Social Security Fund Act and is treated as an expense.

The recognition of the expense and respective interest provision is based on the requirement under the NSSF Act to recognise member balances as a debt obligation.

(iv) Benefit payments to members

Benefits payments to members are made upon meeting criteria for payment as set out in the NSSF Act. Such payments recognised as a charge in the statement of changes in net assets available for benefits, and as a reduction from members’ funds when paid.

(v) Contributions from members

Member contributions remitted by their employers are recognized in the statement of changes in net assets available for benefits when received. Contributions due but not yet received at the end of the financial year are not accrued but accounted for and recognized in subsequent years when received.

q) Reserve account

The reserve account is credited with special contributions by non-eligible employees and amounts recovered in form of fines and penalties from employers that fail to remit members funds as stipulated in the National Social Security Fund Act. The special contributions are credited directly to the reserve account while the fines and penalties are recognised through the statement of changes in net assets available for benefits and then appropriated from the accumulated surplus/deficit to the reserve account. Transfers from the reserve account require the approval of the Minister of Finance in accordance with the NSSF Act.



r) Leases

The Fund assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Fund as a lessee

The Fund applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Fund recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Right-of-use assets (except those meeting the definition of investment property)

The Fund recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. The Fund considered tenancy arrangements for its branches with an estimated lease term of 3 to 6 years.

If ownership of the leased asset transfers to the Fund at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

The right-of-use assets are presented within Note 28 and are subject to impairment in line with the Fund’s policy as described in Note 3 (j) Impairment of non-financial assets.

Right-of-use assets (meeting the definition of investment property)

The Fund’s accounting policy for investment properties is disclosed in Note 3 (h).

Lease liabilities

At the commencement date of the lease, the Fund recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (less any lease incentives receivable), variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Fund and payments of penalties for terminating the lease, if the lease term reflects the Fund exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Fund uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

The Fund’s lease liabilities are presented within other payables in Note 31.

Short-term leases and leases of low-value assets

The Fund applies the short-term lease recognition exemption to its short-term leases of any rental payments (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term.


3. Summary of significant accounting policies (continued)r) Leases (continued)

The Fund as a lessor

Leases in which the Fund does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

s) Current/non-current distinction

The Fund presents assets and liabilities in decreasing order of liquidity which provides information that is reliable and more relevant than a current/non-current presentation because the Fund does not supply goods or services within a clearly identifiable operating cycle.

The operating cycle of the Fund is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. When the Fund’s normal operating cycle is not clearly identifiable, it is assumed to be twelve months.

Disclosures for the amounts expected to be recovered or settled in no more than twelve months after the reporting period and after more than twelve months for each asset and liability line item are in Note 40 (b).

The Fund classifies an asset as expected to be recovered in no more than twelve months after the reporting period when;

• the asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

• it expects to realise the asset within twelve months after the reporting period;• it holds the asset primarily for the purpose of trading; or,• it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle.

The Fund classifies a liability as expected to be settled in no more than twelve months after the reporting period when;

• it expects to settle the liability in its normal operating cycle;• it holds the liability primarily for the purpose of trading;• the liability is due to be settled within twelve months after the reporting period; or• it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period

t) Non-current assets held for sale and discontinued operations

The Fund classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.

Property and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

For investment property previously accounted for using the fair value model, immediately before the initial classification of the asset as held for sale, the carrying amounts of the asset are measured in accordance with policies as disclosed in Note 3 (h).

Assets and liabilities classified as held for sale are presented separately as current items in the statement of net assets available for benefits.


3. Summary of significant accounting policies (continued)t) Non-current assets held for sale and discontinued operations (continued)

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

• Represents a separate major line of business or geographical area of operations• Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or• Is a subsidiary acquired exclusively with a view to resale

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as surplus or deficit after tax from discontinued operations in the statement of changes in net assets available for benefits.

u) Changes in accounting policies and disclosuresBelow are standards issued and effective during the year that had lesser or no impact on the Fund’s financial statements;

• Definition of a Business – Amendments to IFRS 3, effective 1 January 2020The amendment to IFRS 3 Business Combinations clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create output. Furthermore, it clarifies that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the financial statements of the fund.

• Interest Rate Benchmark Reform – Amendments to IFRS 9, IAS 39 and IFRS 7 -effective 1 January 2020The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument.

These amendments have no impact on the financial statements of the fund as it does not have any interest rate hedge relationships.

• Definition of Material – Amendments to IAS 1 and IAS 8 -effective 1 January 2020The amendments provide a new definition of material that states, “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users.

These amendments had no impact on the financial statements of, nor is there expected to be any future impact.

• The Conceptual Framework for Financial Reporting-effective 1 January 2020The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. This will affect those entities which developed their accounting policies based on the Conceptual Framework. The revised Conceptual Framework includes some new concepts, updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts.

These amendments had no impact on the financial statements of the fund.

• Covid-19-Related Rent Concessions – Amendment to IFRS 16-effective 1 June 2020On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 Leases. The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the Covid-19 related rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification.

This amendment had no impact on the financial statements of the Fund.


3. Summary of significant accounting policies (continued)u) Changes in accounting policies and disclosures (continued)

New and revised International Financial Reporting Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance. The changes are not expected to have a significant impact on the Fund’s financial statements. These standards will be applied where applicable on the effective dates.

These standards and interpretations are listed below;

• Classification of Liabilities as Current or Non-current - Amendments to IAS 1 -effective 1 January 2022• Reference to the Conceptual Framework – Amendments to IFRS 3 -effective 1 January 2022• Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 -effective 1 January 2022• Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37-effective 1 January 2022• AIP IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first- time adopter -effective 1

January 2022• AIP IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities -effective 1 January 2022• AIP IAS 41 Agriculture – Taxation in fair value measurements-effective 1 January 2022• IFRS 17 Insurance Contracts -effective 1 January 2023• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IFRS 10 and IAS 28

-postponed indefinitely.

4. Determination of fair value

The fair value of both financial/non-financial assets and fair values have been determined for measurement and/or disclosure purposes based on the methods below.

(i) Investment properties

The Fund uses an external independent valuer with recognized professional qualification and experience to value the Fund’s investment properties on an annual basis. The fair values are based on the market conditions being the price that would be received to sell an asset in an orderly transaction between market participants on the measurement date. In the absence of an active price in an active market, the values are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. The yield that reflects the specific risks inherent in the net cash flows then is applied to the net annual cash flows to arrive at the property valuation.

(ii) Capital work in progress

The Fund applies cost as a proxy to the fair value of capital work in progress in the absence of an active market for assets in a similar condition and in the absence of reliable inputs with which market or income based estimate of fair value can be made.

(iii) Investment in debt and equity instruments

The fair value of financial assets at fair value through profit or loss and debt instruments at amortised cost is determined by reference to their quoted bid prices at the reporting date, if available. The fair value for non-quoted equity instruments has been estimated using the adjusted net asset value methodology. The adjusted net asset method involves deriving the fair value of an investee’s equity instruments by reference to the fair value of its assets and liabilities (recognised and unrecognised).


5. Interest income

2021UGX 000

2020UGX 000

Interest income on short term deposits with banks 20,099,689 21,382,495Interest income on government bonds 1,576,449,595 1,365,625,028Interest income on corporate bonds 7,153,499 9,571,915Interest income on loans and receivables 1,706,765 2,188,691

1,605,409,548 1,398,768,129

6. Real estate income

a) Rental IncomeWorkers House 4,720,418 4,963,396Social Security House 2,862,575 3,034,962Service charge 2,103,951 2,123,826Others – Naguru, Mbarara and Jinja 863,423 1,003,478

10,550,367 11,125,662b) House Sales*Net gains on sale of property* 4,868,635 –Net real estate income 15,419,002 11,125,662

This relates to rental income earned from investment properties. Tenants are charged rental fees based on the square metres occupied at agreed rental charges as specified in the tenancy agreements.

*This relates to house sales of the Mbuya condominiums for UGX 12.98 billion and their related cost of sales worth Shs 8.12 billion.

7. Dividend income

2021UGX 000

2020UGX 000

Safaricom Limited 16,781,604 16,277,080Vodacom Limited 8,425,424 1,086,360Stanbic Bank Uganda Limited 8,261,954 6,299dfcu Limited 7,473,315 –CRDB Tanzania Limited 6,618,773 5,472,194Twiga Limited 5,673,837 4,530,046National Microfinance Bank 4,909,362 3,676,907Kenya Commercial Bank (KCB) 4,203,600 11,715,198Dividend Inc - PTA Shares CB 3,749,884 4,260,568Dividend income from internally managed equities 5,155,479 11,710,454Dividend income earned from fund managers 3,655,045 3,541,120

74,908,277 62,276,226


8. Income/ (Losses)

a) Fair value gains2021

UGX 0002020

UGX 000

Fair value gains on investment properties 69,884,516 46,929,148Fair value gains/ (losses) on externally managed equity securities (Note 18) 11,194,583 (7,581,995)Fair value gains on internally managed equity securities (Note 20) 328,960,909 22,844,349Fair value changes on associates (Note 22) 23,215,399 22,122,997

433,255,407 84,314,499

b) Foreign exchange losses (302,220,865) (94,386,858)

Foreign exchange losses arose from appreciation of foreign currencies against the Uganda Shilling, which affected foreign denominated assets and liabilities.

c) Other income2021

UGX 0002020

UGX 000

Gains on disposal of investment property* 8,519,539 –IFRS modifications 28,036 –Notional income on staff loans 25,231 73,070Miscellaneous income 1,266,020 83,463

9,838,826 156,533

The gain on disposal of investment property relates to disposal of property and equipment and Yusuf Lule land as sold to Government of Uganda and disclosed under Note 30.

9. Administrative expenses

2021UGX 000

2020UGX 000

Staff costs - Note 9 (a) 88,855,639 76,284,904Uganda Retirement Benefits Regulatory Authority levy 7,503,754 6,854,508General staff and training expenses 5,852,335 6,865,726Motor vehicle fuel costs, maintenance and repairs 2,026,619 1,508,473Staff medical insurance 1,648,906 1,512,107Directors’ allowances 1,420,147 954,801Board expenses 1,063,914 1,337,004Auditors’ remuneration 244,031 186,742Legal fees (162,778) 4,887,393Other administrative expenses 16,464,787 23,127,528

124,917,354 123,519,186

a) Staff costsSalaries and wages 73,850,967 62,747,787Social security contributions 7,570,482 6,601,346Contributions to the staff provident fund 4,932,525 4,537,250Gratuity 1,170,759 1,147,628Leave pay 1,260,119 1,137,324Overtime expenses 70,787 113,569

88,855,639 76,284,904


10. Impairment losses on financial assets

Note2021

UGX 0002020

UGX 000

Deposits due from banks 16 212,918 459,744Trade and other receivables 17 1,797,014 3,003,947Debt instruments at amortised cost 19 313,195 (25,509)Loans and advances 21 (49,853) (45,238)

2,273,274 3,392,944

11. Other operating expenses

2021UGX 000

2020UGX 000

Rent and rates* 656,459 812,455Electricity and water 1,789,806 1,590,155Repairs and maintenance 10,081,278 9,888,934Insurance 4,324,067 4,225,807Security expenses 2,266,621 2,357,054Research and library expenses 7,572,547 3,653,811Fund manager expenses 224,025 288,816

26,914,803 22,817,032

*The rent and rates expense relate to KCCA ground rent and rates charges paid to the Kampala Capital City Authority in respect of the Fund’s investment properties.

12. Finance costs

2021UGX 000

2020UGX 000

Interest expense on lease liabilities 454,026 519,721Interest expense on bank overdraft* 1,065,533 696,308

1,519,559 1,216,029

*The Fund utilises a bank overdraft facility from Stanbic Bank Uganda Limited to enable it meet investments cashflow gaps when need arises.

13. Surplus before income taxSurplus before income tax is arrived at after charging / (crediting):

2021UGX 000

2020UGX 000

Amortisation of intangible assets (Note 26) 1,667,461 1,397,334Depreciation on property and equipment and right of use assets (Note 27 and 28) 7,005,698 6,366,421Auditors’ remuneration 244,031 186,742Directors’ emoluments (Note 9) 1,420,147 954,801Foreign exchange losses (Note 8 (b)) 302,220,865 94,386,859Fair value gains on internally managed equity securities (Note 20) (328,960,909) (22,844,349)Fair value (gains)/ losses on externally managed equity securities (Note 18) (11,194,583) 7,581,994Fair value gains on investment property (Note 25) (69,884,516) (46,929,148)


14. Tax

a) Income tax expenseThe income tax expense relates to withholding tax deducted at source from interest on investments in treasury bills and bonds as a final tax as per Income Tax Act section 122(a). No other income tax is charged because the Fund has accumulated trading losses amounting to UGX 1,656 billion as at 30 June 2021 (2020: UGX 1,452 billion). The tax on the Fund’s surplus after interest transfer to member’s funds differs from the theoretical amount that would arise using the basic rate of 30% as follows:

2021UGX 000

2020UGX 000

Surplus before tax from continuing operations net of dealings with members 1,672,312,046 1,303,545,245Surplus before tax from discontinued operations 465,032 588,563Surplus before tax net of dealings with members 1,672,777,078 1,304,133,808

Tax calculated at 30% 501,833,123 391,240,142Tax effect of:Expenses relating to income taxed at source 19,911,468 18,870,576Non- taxable income (4,179,819) (3,560,936)Other non-deductible expenses (457,686,223) (350,341,967)Effect of differential between the income tax statutory rate and the WHT rate on government securities

62,375,210 41,500,834

Effect of discontinued operation 139,510 163,158Prior year deferred tax under/(over) provision 1,355,768 (1,009,256)Unrecognised deferred tax credit (Note 13(b)) 43,679,242 56,186,488Tax charge 167,428,279 153,049,039

b) Deferred tax assetDeferred tax is calculated on all temporary differences using the liability method at the principal tax rate of 30% (2020: 30%).

Year ended 30 June 2021Start of year

UGX 000

Charge/(Credit) tochanges in net assetsavailable for benefits

UGX 000End of year

UGX 000

Deferred tax assetsUnrealized foreign exchange losses (6,184,456) (93,521,570) (99,706,026)Impairment allowance on financial assets (11,933,847) (681,982) (12,615,829)Provision for litigation (242,112) 486,469 244,357Lease liability under IFRS 16 (1,181,696) 96,187 (1,085,509)Impairment of associate (1,484,013) – (1,484,013)Bonus provision (4,288,717) (439,676) (4,728,393)Tax losses carried forward (435,591,298) (61,136,074) (496,727,372)

(460,906,139) (155,196,646) (616,102,785)


14. Tax (continued)

b) Deferred tax asset (continued)

Year ended 30 June 2021Start of year

UGX 000

Charge/(Credit) tochanges in net assetsavailable for benefits

UGX 000End of year

UGX 000

Deferred tax liabilitiesUnrealized foreign exchange gains 21,866,794 (12,728,873) 9,137,921Fair value gains on investment properties 114,784,022 20,965,355 135,749,377Fair value changes on equity instruments 28,264,525 98,688,273 126,952,798Right of use Asset 1,200,877 (429,578) 771,299Unrealised gains in investments with fund managers 1,376,969 3,358,3754,735,344Accelerated depreciation 2,293,201 1,663,852 3,957,053

169,786,388 111,517,404 281,303,792Net deferred tax asset (291,119,751) (43,679,242) (334,798,993)

Year ended 30 June 2020

Deferred tax assetsUnrealized foreign exchange losses (183,286,818) 177,102,362 (6,184,456)Impairment allowance on financial assets (10,915,964) (1,017,883) (11,933,847)Provision for litigation (242,112) – (242,112)Lease liability under IFRS 16 – (1,181,696) (1,181,696)Impairment of associate – (1,484,013) (1,484,013)Bonus provision (4,323,109) 34,392 (4,288,717)Tax losses carried forward (412,661,111) (22,930,187) (435,591,298)

(611,429,114) 150,522,975 (460,906,139)Deferred tax liabilitiesUnrealized foreign exchange gains 247,925,358 (226,058,564) 21,866,794Fair value gains on investment properties 100,705,278 14,078,744 114,784,022Fair value changes on equity instruments 21,411,220 6,853,305 28,264,525Right of use Asset – 1,200,877 1,200,877Unrealised gains in investments with fund managers 3,857,080 (2,480,111)1,376,969Accelerated depreciation 2,596,915 (303,714) 2,293,201

376,495,851 (206,709,463) 169,786,388

Net deferred tax asset (234,933,263) (56,186,488) (291,119,751)

The net deferred tax asset of UGX 335 billion (2020: UGX 291 billion) has not been recognised in these financial statements because it is not probable that future taxable profit will be available against which the Fund can utilise the benefits therefrom. At 30 June 2021, tax losses carried forward amounted to UGX 1,656 billion. Despite the Fund making surplus earnings, Section 22(1) and 25 of the Income Tax Act allows a deduction of interest incurred during the year of income in respect of a debt obligation. In addition, the Fund obtained a ruling from Uganda Revenue Authority in 2001 advising that interest declared to members is tax deductible. The Fund follows this ruling when preparing income tax computations and it is unlikely that the Fund will have taxable profits against which the deferred income tax asset can be utilised.

The Fund’s business is to collect contributions from members, invest and pay interest to the members. With the deductibility of the interest distribution, it is unlikely that the Fund will have taxable profit against which to utilise the tax assets since the largest portion of the earnings are paid to members as interest. Subsequent to the 2001 ruling from URA, however, URA has since challenged NSSF’s tax computations and the basis of the deductibility of interest declared to members. Details of this and the current status of the open tax matter are disclosed in Note 38 (a).


14. Tax (continued)

c) Tax deposit receivable

2021UGX 000

2020UGX 000

Tax deposit receivable 25,323,522 25,323,522

As disclosed in Note 38(a), the Fund received an assessment for tax from URA which it disputed. In accordance with the Income Tax Act, the Fund was required to pay 30% of the assessed tax before proceeding to court. The Directors believe that this amount is recoverable as the deposit will either be refunded in the event of a successful outcome, or applied toward the tax obligation in the event that the fund is not successful in its court case.

15. Cash and bank balances

2021UGX 000

2020UGX 000

Cash at bank 80,729,704 25,861,953Cash at hand 98,530 40,370Mobile money 7,579 119,772

80,835,813 26,022,095

The Fund utilises the services of several commercial banks to collect contributions from employers each month. Collecting banks are required to transfer amounts collected at the end of every week to the Fund’s custodian, Stanbic Bank and Standard Chartered Bank. There are no transfer charges and the banks do not pay interest on amounts held except for Standard Chartered Bank, Citibank and Stanbic Bank which pay interest at the rates of 7%, 5% and 1% (2020: 7%,5% and 1%) respectively.

The fair value of the cash and bank balances is equal to their carrying amount. For the purpose of the statement of cash flows, cash and cash equivalents comprise the cash and bank balances above. The Fund’s cash and bank balances are not restricted for use.

16. Deposits with commercial banks

2021% in class

2020% in class

2021UGX 000

2020UGX 000

Housing Finance Bank Uganda Limited 39.2 39.3 80,903,663 80,456,041Stanbic Bank Uganda Limited 26.2 25.9 54,013,596 53,007,405Standard Chartered Bank Uganda Limited 5.1 5.3 10,509,370 10,945,036NCBA Uganda Limited – 9.9 – 20,195,616United Bank of Africa 12.1 18.2 25,052,979 37,333,387Finca Bank Uganda Limited 1.6 – 3,278,229 –KCB Bank Uganda Limited – 1.4 – 2,734,483Equity Bank Uganda Limited 15.8 – 32,679,247 –Gross deposits 100 100 206,437,084 204,671,968Expected credit loss (1,727,613) (1,514,695)

Net carrying amount 204,709,471 203,157,273

The gross deposits with commercial banks are analysed as follows:

2021UGX 000

2020UGX 000

Amounts due within three (3) months 54,092,628 55,741,888Amounts due after three (3) months but less than 1 year 119,982,991 57,596,241Amounts due after 1 year 32,361,465 91,333,839Gross deposits 206,437,084 204,671,968


16. Deposits with commercial banks (continued)

The change in the bank deposits during the year was as follows:

2021UGX 000

2020UGX 000

At the beginning of the year 203,157,273 145,736,449New placements / deposits 172,953,409 656,066,104NARO RBS transfer to NSSF (Note 34) 2,174,802 –Maturities (175,627,748) (598,317,434)Interest accrued 19,431,646 21,382,495Interest received (15,623,415) (17,682,530)Foreign exchange losses (340,681) (2,093,067)Allowance for credit losses (212,918) (459,744)WHT deducted at source (1,202,897) (1,475,000)At 30 June 204,709,471 203,157,273

The deposits are carried at amortised cost and made for varying periods of between 1 and 365 days depending on the cash requirements of the Fund. The weighted average effective interest rate on deposits with commercial banks as at 30 June 2021 was 11.94% (2020: 9.28%).

The allowance for expected credit losses is analysed as follows:

2021UGX 000

2020UGX 000

At the beginning of the year 1,514,695 1,054,951Increase during the year 212,918 459,744At 30 June 1,727,613 1,514,695

The allowance relates to the expected credit losses. Refer to Note 40 (c) for details.

17. Trade and other receivables

2021UGX 000

2020UGX 000

Trade receivable 8,788,036 8,015,701Contributions receivable* 1,879,494 1,879,493Dividends receivable 37,004,566 36,464,911Other receivables 5,221,289 4,091,599Yusuf Lule land receivable** 25,000,000 –Provision for expected credit loss (15,152,009) (13,378,933)

62,741,376 37,072,771Prepayments 2,022,980 2,008,955VAT recoverable 5,999,741 13,470,595Deferred staff expense 384,347 409,577

71,148,444 52,961,898

*The contributions receivable relate to cheque payments in previous years (2011) that were not honoured and fully recognised as a receivable. These have been fully provided for.**This relates to a receivable from the Government of Uganda for the sale of Yusuf Lule land as disclosed in Note 30. This monies were subsequently received after year end on 11 August 2021.

The provision for impairment loss is analysed as follows:

2021UGX 000

2020UGX 000

At the beginning of the year 13,378,933 10,374,986Utilisation (23,938) –Increase in expected credit loss 1,797,014 3,003,947At 30 June 15,152,009 13,378,933

The provision relates to the expected credit losses on trade receivables, contributions receivable, dividends receivable and other receivable accounts. Refer to Note 40 (c) for details.


18. Equity securities externally managed

2021UGX 000

2020UGX 000

GenAfrica 7,876,265 6,281,038Pinebridge Investments 96,233,331 81,381,444

104,109,596 87,662,482

The investments in securities held-for-trading are equity investments managed by the Fund Managers; GenAfrica and Pinebridge Investments. The Fund Managers have the mandate to make investments at their discretion but in compliance with the Fund’s investment policy.

The changes in equity securities externally managed during the year were as follows:

2021UGX 000

2020UGX 000

At the beginning of the year 87,662,482 91,432,601Purchases 6,370,470 12,776,151Disposals (1,265,715) (7,020,097)Fair value gains/ (losses) 11,194,583 (7,581,995)Foreign exchange gains/ (losses) 147,776 (1,944,178)As at 30 June 104,109,596 87,662,482

% in class2021

UGX 000

% in class2020

UGX 000

Number of shares held Market Value

2021 2020 2021 2020

Uganda Securities ExchangeStanbic Bank (U) Limited 37.81 33.70 193,169,286 193,169,286 5,118,986 4,636,063DFCU Limited 45.50 48.95 10,440,437 10,440,437 6,159,858 6,734,082New Vision Printing and Publishing Company Limited

5.00 5.01 2,185,857 2,185,857 677,616 688,545

Umeme Limited 5.91 6.51 3,654,088 3,654,088 800,245 895,252Uganda Clays Limited – 0.61 – 9,330,620 – 83,976Bank of Baroda 5.78 5.22 6,525,000 6,525,000 783,000 717,750

100 100 13,539,705 13,755,668

Nairobi Securities ExchangeAbsa Bank Kenya Limited 5.55 7.39 13,013,400 13,013,400 4,255,226 4,556,798Bamburi Cement Limited – 0.01 – 5,100 – 5,017Co-operative Bank of Kenya 3.26 3.79 5,485,564 5,485,564 2,495,287 2,334,918Diamond Trust Bank Kenya 3.10 4.89 1,217,422 1,217,422 2,377,659 3,016,037East African Breweries Limited 10.86 12.83 1,397,016 1,390,316 8,323,382 7,912,596Equity Group Holdings Limited 15.27 15.58 7,933,542 7,899,442 11,702,545 9,601,331I&M Holdings Limited – 2.25 – 793,400 – 1,389,649Kenya Commercial Bank 16.05 13.23 8,747,474 6,406,674 12,297,642 8,157,663NCBA Bank 0.05 0.06 44,286 40,260 37,224 37,552Safaricom Limited 41.20 33.37 23,102,100 20,501,500 31,564,299 20,575,800Stanbic Holdings PLC 4.65 6.38 1,334,000 1,334,000 3,561,730 3,935,453Standard Chartered Bank Kenya Limited 0.01 0.22 1,222 23,090 5,226 137,269

100 100 76,620,220 61,660,083

Dar es Salaam Stock ExchangeTanzania Breweries Limited 67.68 80.99 560,000 560,000 9,440,918 9,918,465CRDB Bank Plc 32.32 19.01 9,970,000 9,970,000 4,508,753 2,328,266

100 100 13,949,671 12,245,731


18. Equity securities externally managed (continued)

The trading prices at the last date of trading for the years ended 30 June 2021 and 2020 were as follows:

2021UGX

2021Kshs

2021Tshs

2020UGX

2020Kshs

2020Tshs

Stanbic Bank (U) Limited 26.50 – – 24.00 – –DFCU Limited 590.00 – – 645.00 – –New Vision Printing and Publishing Company Limited

310.00 – – 315.00 – –

Umeme Limited 219.00 – – 245.00 – –Uganda Clays Limited – – – 9.00 – –Bank of Baroda (Uganda) 120.00 – – 110.00 – –Safaricom Limited – 41.45 – – 28.65 –Kenya Commercial Bank – 42.65 – – 36.35 –East African Breweries Limited – 180.75 – – 162.5 –Bamburi Cement Limited – – – – 28.00 –Equity Group Holdings Limited – 44.75 – – 34.7 –Stanbic Holdings Plc – 81 – – 84.5 –NCBA Bank Limited – 25.5 – – 26.55 –Absa Bank Kenya Limited – 9.92 – – 10.00 –Nation Media Group – – – – – –Diamond Trust Bank Kenya Limited – 59.25 – – 70.75 –Standard Chartered Bank Kenya Limited – 129.75 – – 169.75 –Co-operative Bank Kenya Limited – 13.8 – – 12.15 –I&M Holdings Limited – – 50.00Tanzania Breweries Limited – 10,900.00 10,900.00CRDB Bank Plc – 295.00 145.00


19. Debt instruments at amortised cost

2021% in Class

2020% in Class

2021UGX 000

2020UGX 000

Treasury bonds 99.65 99.4 11,520,467,150 9,963,025,774Corporate bonds 0.35 0.6 40,160,249 57,904,791Gross investments 100 100 11,560,627,399 10,020,930,565Impairment provision (4,406,099) (4,092,904)Net investments 11,556,221,300 10,016,837,661

The allowance for expected credit losses is analysed as follows:

2021UGX 000

2020UGX 000

At the beginning of the year 4,092,904 4,118,413Increase/ (decrease) during the year 313,195 (25,509)At 30 June 4,406,099 4,092,904

Debt instruments at amortised cost (continued)

Further information about allowances for expected credit losses (ECL), is presented in Note 40 (c). The change in debt instruments at amortised cost investments during the year were as follows:

2021UGX 000

2020UGX 000

At start of year 10,016,837,661 8,528,619,800Purchases 2,159,344,868 1,910,816,202NARO RBS transfer to NSSF*(Note 34) 26,161,752 –Maturities (451,382,495) (458,924,177)Interest accrued 1,583,603,094 1,375,196,943Interest received (1,388,626,625) (1,034,884,756)Foreign exchange losses (222,777,935) (150,962,821)Allowance for credit losses (313,195) 25,509Withholding tax deducted at source as a final tax (166,625,825) (153,049,039)At end of year 11,556,221,300 10,016,837,661

The yield rates on the treasury bonds ranged from 10.92% to 20.51% (2020: 10.81% to 21.22%) and the treasury bonds have maturity periods of between 1 and 15 years. The interest rates for corporate bonds ranged from 11.5% to 14.7% (2020: 11.5% to 14.7%) and the corporate bonds have maturity periods of between 1 and 8 years.

*NARO Retirement Benefit Scheme transferred debt instruments equivalent to UGX 26 billion during the financial year. Refer to Note 34 for the detailed disclosure.

Pledged assets: The Fund has two liens issued on treasury bonds with a carrying amount at year end of UGX 33 billion as security for the construction of Pension towers.


20. Equity investments internally managed

2021% in Class

2020% in Class

2021% Held

2020% Held

2021UGX 000

2020UGX 000

Bank of Baroda (Uganda) Limited 0.3 0.4 2.00 2.00 6,294,732 5,495,188DFCU Limited 1.8 2.5 7.34 7.34 33,360,490 35,993,203Safaricom Limited 25.5 22.8 0.83 0.83 483,742,230 333,098,829Centum Investments Limited 0.1 0.3 0.73 0.73 2,321,088 3,966,644Stanbic Bank Uganda Limited 2.9 3.4 4.00 4.00 54,495,701 49,155,248Cooperative Rural Dev’t 4.7 3.1 7.52 7.52 89,076,280 45,885,536Vodacom TZ shares 1.7 2.6 0.24 0.24 32,920,987 38,086,302New Vision Printing and Publishing Company Limited

0.2 0.3 19.61 19.61 4,650,000 4,725,000

Bank of Kigali 1.9 3.0 6.36 6.36 36,415,020 43,354,675Tanzania Breweries Limited 11.2 14.8 4.19 4.19 213,669,477 216,960,746Equity Bank Holdings Plc 11.6 10.0 3.25 3.25 221,322,869 146,421,875Jubilee Insurance Limited 1.4 1.1 2.60 2.60 26,817,383 15,953,543East African Breweries Limited (EABL) 8.4 7.0 2.29 2.29 159,860,395 102,901,687Eastern and Southern African Trade and Development Bank (TDB Bank)

8.2 9.5 3.03 3.03 155,782,636 139,131,656

Tanzania Portland Cement (Twiga) 2.8 2.3 5.28 5.28 52,565,400 33,665,720British-American Invest (Britam) 0.5 0.7 2.03 2.03 9,402,736 10,501,908CIPLA QC 1.4 1.8 7.38 7.38 26,936,139 26,936,139Kenya Re-Insurance 0.1 0.1 3.43 3.43 1,956,507 1,798,853Kenya Commercial Bank 10.7 8.3 3.20 3.20 203,679,278 120,942,980National Microfinance Bank (NMB) 4.4 6.0 4.68 4.68 84,159,972 88,200,965Absa Bank Kenya Plc (ABSA.ke) 0.0 – 0.00 – 85,551 –Diamond Trust Bank (Kenya) Limited 0.0 – 0.00 – 74,583 –I & M Holdings Limited 0.0 – 0.00 – 102,115 –CFC Stanbic (Kenya) Holdings 0.0 – 0.00 – 24,996 –Co-operative Bank of Kenya Limited 0.0 – 0.00 – 233,816 –

100 100 1,899,950,381 1,463,176,697

All the above equity investments are traded on the Uganda Securities Exchange (USE) except for Safaricom, KCB, Kenya Re-Insurance and Equity Group which are traded on the Nairobi Securities Exchange (NSE), Tanzania Breweries, National Microfinance Bank, East African Breweries Limited, Cooperative Development Bank, Vodacom and Twiga which are traded on the Dar es Salaam Stock Exchange (DSE), Bank of Kigali which is traded on the Rwanda Stock Exchange (RSE), TDB Bank which is not traded on a stock exchange.


20. Equity investments internally managed (continued)

The trading prices at the last date of trading for the years ended 30 June 2021 and 2020 were as follows:

2021 2020

UGX Kshs Tshs Rwf USD UGX Kshs Tshs Rwf USD

Bank of Baroda (Uganda) Limited

120.00 – – – – 110.00 – – – –

dfcu Limited 590.00 – – – – 645.00 – – – –Safaricom Limited – 41.45 – – – – 28.65 – – –Centum Investments Limited 527.52 – – – – 901.51 – – – –Stanbic Bank Uganda Limited 26.5 – – – – 24.00 – – – –New Vision Printing and Publishing Company Limited

310.00 – – – – 315.00 – – – –

Kenya Re-Insurance – 2.47 – – – – 2.14 – – –Vodacom – – 770.00 – – – – 850 – –Cooperative Development Bank

– – 295.00 – – – – 145 – –

Equity Bank Kenya – 34.70 – – – – 34.70 – – –Jubilee Insurance Limited – 350.50 – – – – 242.00 – – –East African Breweries Limited

– 180.75 – – – – 162.50 – – –

Kenya Commercial Bank – 42.65 – – – – 36.35 – – –Bank of Kigali – – – 245.00 – – – – 245.00 –Tanzania Breweries Limited – – 10,900.00 – – – – 10,900.00 – –Tanzania Portland Cement Limited

– – 3,600.00 – – – – 2,200.00 – –

British-American Invest (Britam)

– 7.24 – – – – 7.62 – – –

CiplaQC 100.00 – – – – 100.00 – – – –Trade Development Bank – – – – 12,938.00 – – – – 12,213.00National Microfinance Bank (NMB)

– – 2,340 – – – – 2,340 – –

Absa Bank Kenya Plc (ABSA.ke)

– 9.92 – – – – – – – –

Diamond Trust Bank (Kenya) Limited.

– 59.25 – – – – – – – –

I & M Holdings Limited – 21.85 – – – – – – – –CFC Stanbic (Kenya) Holdings – 25.50 – – – – – – – –Co-operative Bank of Kenya Limited

– 13.80 – – – – – – – –

*The shares are not quoted in an active market and the price used to determine the carrying amount has been determined through techniques as described in Note 40.


20. Equity investments internally managed (continued)

During the year, the Fund purchased the following shares:

2021 Currency SharesShareprice

ExchangeRate

CostUGX 000

Absa Bank Kenya Plc Kes 261,300 10.00 35.017200 91,500CFC Stanbic (Kenya) Kes 29,700 84.00 35.120415 87,619Co-operative Bank of Kenya Limited Kes 513,360 12.00 35.453903 218,407EABL Kes 8,717,200 176.00 34.012643 52,183,122Equity Bank Holdings Kes 29,373,700 35.00 34.116139 35,074,103I & M Holdings Limited Kes 141,600 50.00 35.016200 247,915Jubilee Insurance Limited Kes 436,000 263.00 32.669135 3,746,104KCB Kenya Kes 49,699,326 39.00 33.078218 64,114,639Safaricom (K) Limited Kes 21,649,400 32.00 33.010104 22,868,766Diamond Trust Bank Kes 38,140 71.00 34.892903 94,488Tanzanian Breweries Tzx 396,874 5,000.00 1.595433 3,165,929TDB USD 86 12,213.00 3701.23 3,887,468Bank of Baroda UGX 2,499,853 110.00 1.0 274,984DFCU Bank UGX 739,788 645.00 1.0 477,163Stanbic Bank Uganda Limited UGX 8,306,210 24.00 1.0 199,349

186,731,556

2020 Currency SharesShareprice

ExchangeRate

CostUGX 000

Stanbic Bank UgandaLimited UGX 712,965,437 24.68 1.0 17,595,987Equity Bank Holdings Kshs 10,473,100 36.00 35.4667 13,372,067Safaricom (K) Limited Kshs 32,384,000 28.00 34.4662 31,252,296KCB Kenya Kshs 7,604,300 45.00 35.7700 12,240,261EABL Kshs 500,000 138.00 36.851 2,542,719Jubilee Insurance Tzs 484,364 358.00 35.8123 6,209,932Tanzania Breweries Tzs 5,200,000 7,917.24 1.5929 65,579,131CRDB Bank Tzs 96,456,402 95.00 1.6079 14,733,764NMB Bank Tzs 23,400,000 700 1.6163 26,474,994PTA Bank USD 89 11,463 3664.75 3,738,804

193,739,955

The change in equity investments during the year was as follows:

2021UGX 000

2020UGX 000

At the beginning of the year 1,463,176,697 1,265,470,262Acquisition of new shares 182,296,701 193,739,955NARO RBS transfer to NSSF 4,434,855 –Fair value gains 328,960,909 22,844,349Foreign exchange losses (78,918,781) (18,877,869)At 30 June 1,899,950,381 1,463,176,697


21. Loans and advances

2021UGX 000

2020UGX 000

Uganda Clays Limited (Note 37) 20,592,838 20,592,838Housing Finance Bank (Note 37) 11,342,820 15,009,486Staff loans 895,829 983,085

32,831,487 36,585,409Fair value of discount on staff loans (384,347) (409,577)

32,447,140 36,175,832Allowance for credit losses (20,743,105) (20,792,958)

11,704,035 15,382,874

The allowance for credit losses is analysed as follows:At the beginning of the year 20,792,958 20,838,196Decrease in impairment allowance during the year (49,853) (45,238)At 30 June 20,743,105 20,792,958

The change in the loans and advances during the year was as follows:

2021UGX 000

2020UGX 000

At the beginning of the year 15,382,874 19,024,785Principle repayments (3,753,922) (3,666,667)Interest accrued 1,667,244 2,188,691Interest received (1,667,244) (2,282,243)Fair value adjustment 25,230 73,070Allowance for credit losses 49,853 45,238At 30 June 11,704,035 15,382,874

The loan to Uganda Clays Limited (UCL) which was granted on 29 December 2010 is unsecured and was repayable within 96 months in equal monthly instalments commencing after a grace period of two years (effective 27 December 2013). The loan has a fixed interest rate of 15%. For the six months’ period to 30 June 2021, UCL made a profit before tax of UGX 2,750 million and its current assets exceeded current liabilities by UGX 17,852 million as at 30 June 2021. Despite the improvement in the company’s performance, no loan repayment has been received by 30 June 2021. Therefore, the loan has been fully impaired as recovery procedures continue to be enforced.

Housing Finance Bank (the bank) has two loan facilities with the Fund of UGX 25 billion at a rate of 11.5% (2019: 11.5%) and UGX 20 billion at a rate of 13.5% (2019: 13.5%), respectively. The loans were granted on 25 February 2011 and 16 October 2009, respectively. The loan of UGX 25 billion is repayable over a period of 15 years while that of UGX 20 billion is repayable over 10 years. Instalments are due on a quarterly basis after a grace period of 24 months from the date of the first disbursement. During the grace period, interest accrued is payable. The loans are secured by the bank’s property on Plot 25, Kampala Road and identifiable and performing condominium mortgage book portfolio worth at least UGX 10 billion of present and future assets representing 25% of the loan sum for the duration of the loan agreement.

Staff loans are loans issued by the Fund to its employees at a discounted interest rate of 6.5% (2019: 6.5%). The loans are issued to employees to acquire/construct houses. The loans are secured by the related property and are repayable over periods of between 15 to 20 years.


22. Investments in associates

Housing FinanceBank

UGX 000

Uganda ClaysLimited

UGX 000

TPS UgandaLimited

UGX 000Umeme Limited

UGX 000Yield Fund

UGX 000Total

UGX 000

At 1 July 2019 75,088,713 13,040,204 8,809,138 219,179,637 1,489,128 317,606,820Share of profit / (loss) 13,484,741 (423,004) (269,600) 22,943,576 (291,502) 35,444,211Impairment of associate

– (4,946,709) – – – (4,946,709)

Share of results of associates

13,484,741 (5,369,713) (269,600) 22,943,576 (291,502) 30,497,502

Additions 30,500,000 – – – 1,057,500 31,557,500Share of prior period adjustments

– (944,297) – 7,131,013 – 6,186,716

Share of OCI, net of tax – – – (8,374,505) – (8,374,505)Less: dividends – – (419,776) (15,436,780) (372,312) (16,228,868)At 30 June 2020 119,073,454 6,726,194 8,119,762 225,442,941 1,882,814 361,245,165

At 1 July 2020 119,073,454 6,726,194 8,119,762 225,442,941 1,882,814 361,245,165Share of results of associates

16,897,684 2,944,467 (985,475) 4,536,030 (177,307) 23,215,399

Additions – – – 369,282 439,031 808,313Less: dividends (6,206,823) (395,064) – (4,593,357) – (11,195,244)At 30 June 2021 129,764,315 9,275,597 7,134,287 225,754,896 2,144,538 374,073,633

As at 30 June 2021, the Fund had shareholding of 50%, 32.52%, 13.99%, 23.11% and 9.8% (2020: 50%, 32.52%, 13.99%, 23.2% and 9.8%) in the issued share capital of Housing Finance Bank, Uganda Clays Limited, TPS Uganda Limited, Umeme Limited and Yield Fund respectively. These investments have been accounted for under the equity method.

The Fund is involved in the activities of TPS Uganda Limited with board representation. Key investment and finance decisions are made in consultation with the Fund because of its holding in the company. This is therefore classified as an investment in associate even though the percentage holding is less than the presumptive 20%.

The Fund increased its involvement in the activities of Yield Fund in 2018 getting representation on the Board. Investment decisions and key decisions at Yield Fund have to be done in consultation with NSSF hence being recognised as an associate even though the percentage holding is less than the presumptive 20%.


22. Investments in associates (continued)

The Fund’s 50% holding in Housing Finance Bank does not give it a controlling interest nor does it give it joint control and as such, the investment continues to be accounted for as an associate.

Although the Fund holds 9.8% (2020: 9.8%) the Yield Fund, it has a significant influence in it due to the fact that it has a third of the Board composition. In addition, the Fund’s input is sought prior to approval of significant transactions. As such, the investment is accounted for as an associate.

Nature of activities of associates

Company Nature of activities

Housing Finance Bank The Bank is engaged in the business of commercial banking and the provision of related services, and is licensed under the Financial Institutions Act, 2004.

Uganda Clays Limited The principal activities of the company are the production and sale of a wide range of clay building products. The main items produced are roofing tiles.

TPS (Uganda) Limited The principal activities of the company are operating and running a hotel facility in Uganda, serving the business and tourist markets.

Umeme Limited Through a concession with the Government of Uganda, Umeme operates as the primary electricity distribution company in Uganda, responsible for distributing electricity to Ugandan residents, commercial and government entities.

Yield Fund Yield Uganda Investment Fund specializes in investments in small and medium agri-businesses in the form of equity, semi-equity and debt. The Fund targets agriculture-related businesses across all value chains, with clear competitive advantage and ambitious local management.

The fair values for unquoted investment in associates has been estimated based on the Fund’s shares of the net assets excluding associate at year end. Where the reporting periods differ by over 3 months, the Fund used the half-year unaudited financial statements for the differential period, with adjustments for over/under sharing of results upon receipt of the audited financial statements being made in the subsequent period.

The Fund has performed a review of trading activities in the shares of Umeme Limited and Uganda Clays limited and conclude that the patterns do not fulfil the characteristics of an active market, and as a result, the price of shares in that market does not represent values at which relevant market participants trading the asset are willing to sell it. Accordingly, the Fund has applied a valuation approach that based on the valuable amount of the holding in Umeme Limited and applied its share of net assets in Uganda Clays Limited.

Housing Finance Bank

Uganda Clays Limited

TPS (Uganda) Limited Umeme Limited Yield Fund

Principal place of business

Investment House, Plot 4 Wampewo Avenue, Kololo, P. O. Box 1539, Kampala

14 kms, Entebbe Road, Kajjansi, P. O. Box 3188, Kampala

SN Chambers, Plot 36 Nile Avenue, P. O. Box 7814, Kampala

Rwenzori House, Plot 1 Lumumba Avenue, P.O. Box 23841, Kampala

Plot M697 Equata Building UMA Showground, Lugogo, Kampala

Market price Not Listed UGX 9 per share Not Listed UGX 245 per share Not Listed

SecurityListed/ unlisted

Number of Shares Held Price per Share Market Value

2021 20202021UGX

2020UGX

2021UGX 000

2020UGX 000

Umeme Limited Listed 375,279,200 373,771,921 219 245 82,186,145 91,574,121Uganda Clays Limited Listed 292,640,000 292,640,000 8.2 9 2,399,648 2,633,760Housing Finance Bank Unlisted 3,050,000 3,050,000 – – – –TPS (Uganda) Limited. Unlisted 19,500 19,500 – – – –Yield Fund Unlisted 753,936 753,936 – – – –

84,585,793 94,207,881

In applying the equity method for all associates except Yield Fund, the Fund has used the audited financial statements for period ended 31 December 2020 in deriving the share of results for the 6 months to 31 December 2020. The Fund has used unaudited results for the 6 months to 30 June 2021 in deriving the share of results for the 6 months differential period between the associates’ reporting date and the fund’s reporting date.


23. inventories

2021UGX 000

2020UGX 000

Completed housing units for sale [Note 23 (a)] 8,116,168 14,447,603Housing units under development [Note 23 (b)] 267,358,705 210,322,750

275,474,873 224,770,353

a) Completed housing units relate to the Mbuya housing project. Construction was completed in 2019 and the sales process is underway. During the year, 20 housing units were sold resulting in the following movement:

2021UGX 000

2020UGX 000

At the start of the year 14,447,603 14,447,603Additions 1,784,733 –Sales (8,116,168) –At the end of the year 8,116,168 14,447,603

b) Housing units under development related to the Lubowa and Temangalo housing projects. The movement in these balances was as follows:

CostLubowaUGX 000

TemangaloUGX 000

TotalUGX 000

At 1 July 2019 121,060,544 36,000,000 157,060,544Additions 50,362,206 – 50,362,206Fair value gain on land – 2,900,000 2,900,000At 30 June 2020 171,422,750 38,900,000 210,322,750Additions 36,225,774 20,710,181 56,935,955Fair value gain on land – 100,000 100,000At 30 June 2021 207,648,524 59,710,181 267,358,705

c) The Fund has experienced a slower than anticipated period of sale of housing units at Mbuya. In conjunction with the slowdown in the property market in the wave of the Covid-19 pandemic, the Directors found it prudent to apply cost as a proxy to fair value as the sales comparison approach was deemed not to be sufficiently reliable to act as a basis for fair value at year end.

The Fund’s development at Lubowa remains in progress and the marketing process has not yet commenced. As at 30 June 2021, the Fund had not concluded pricing for the housing units under development and therefore had little market experience on the demand and uptake for the units under development. The Fund was also unable to apply comparable sales price approach due to the unique nature of the Lubowa housing project.

During the year, the Fund finalised plans for the development of land at Temangalo into housing units for sale. In addition, the Fund appointed the contractor for construction of the housing units and made a mobilisation payment during the year.

Inventories for sale and inventories under development are measured at cost as an approximation of fair value reflecting the current stage of development of the properties.


24. Capital work-in-progress (CWIP)

CostArua

UGX 000CAPEX

UGX 000Total

UGX 000

At 1 July 2019 2,330,000 6,593,713 8,923,713Additions – 7,495,122 7,495,122Transfer to investment property – (377,966) (377,966)Transfer to PPE – (4,479,784) (4,479,784)Transfer to intangibles – (2,030,860) (2,030,860)Provision for impairment (2,330,000) – (2,330,000)At 30 June 2020 – 7,200,225 7,200,225Additions – 6,904,532 6,904,532Transfer to PPE – (430,880) (430,880)Transfer to intangibles – (63,833) (63,833)At 30 June 2021 – 13,610,044 13,610,044

The Arua capital work-in-progress relates to construction costs for a hotel at the golf course. As at 30 June 2009, construction of the hotel was near completion but modalities of share of interest in the hotel had not been finalized with the trustees of the Arua Golf Club. The Fund has estimated to incur losses as a result of the delayed implementation of this joint venture and ownership structure of the joint venture. Due to uncertainties surrounding the recoverability of these amounts, the balance was fully impaired in 2008. Management is currently negotiating with the trustees of the Golf Club with a view to finalizing the joint venture arrangements.

Capex –This relates to the various CAPEX expenditure developments at the head office, designs for the biometric systems, contactless smart card solution design and development, portfolio management system, Electronic document and records management system (EDRMS) among others.

Off-taker arrangement – The fund has an off taker arrangement for the construction of 160 units affordable units on land already approved by the Fund at Kyadondo. The units are expected to be built and transferred to the Fund for a consideration of UGX 23,280,000,000 by the Contractor (i.e. China National Complete Plant Import and Export Corporation). As at 30 June 2021, the contractor had acquired land and registered it under the Fund’s name.

The Fund shall take ownership of the property upon completion of construction and payment shall be made to the Contractor. As at 30 June 2021, no payment has been made and no obligation has been recognised, as such, no entries have been made to the financial statements. The project is estimated to be completed in June 2022.

25. Investment properties


Valuation atstart of year

UGX 000

Effect ofIFRS 16

UGX 000AdditionsUGX 000

DisposalUGX 000

Fair valuechangesUGX 000

Reclassfrom/ (to

CWIPUGX 000

Reclass toheld for sale

UGX 000

Valuation atend of year

UGX 000

Commercial properties 80,477,001 – 229,533 – (3,607,000) (22,057,519) – 55,042,015Undeveloped land 495,534,152 – 760,000 (635,000) 73,391,516 (1,301,532) – 567,749,136Others* 149,459,294 – 80,255,809 – – – – 229,715,103

Total 725,470,447 – 81,245,342 (635,000) 69,784,516 (23,359,051) – 852,506,254

Year ended 30 June 2020Commercial properties 76,654,147 – 486,240 – 2,958,648 377,966 – 80,477,001Undeveloped land 467,465,168 730,000 – – 43,970,500 – (16,631,516) 495,534,152Others 91,352,872 – 58,106,422 – – – – 149,459,294

Total 635,472,187 730,000 58,592,662 – 46,929,148 377,966 (16,631,516) 725,470,447

* This included the transfer of land from NARO to NSSF and Lumumba project for the construction and development of pension towers.


25. Investment properties (continued)

Investment properties comprise land and buildings held to earn rental income and/or capital appreciation. The fair values of each investment properties were assessed by atleast one of the independent certified professional valuers including Stanfield Property Partners Limited, Ridgeline Uganda Limited, S-M Cathan Property Consult and Reitis Limited as at 30 June 2021.

The valuations were carried out in accordance with the International Valuation Standards, with regard to relevant local statutes, customs, and market practice. In determining the fair values of investment properties especially in the case of undeveloped land, the valuer used the market approach by reference to the open market value which is the best price at which the sale of an interest in a property might reasonably be expected to have been completed unconditionally for cash consideration on the date of assessment. The valuers also utilised the income capitalisation approach by reference to the net cashflows/annual incomes from commercial property (majorly buildings) where the buildings were set up primarily for rental purposes unless the approach did not reflect reasonable estimates based on current market conditions.

In instances where the market value of a property could not be ascertained due to lack of information, the valuers adopted the cost approach which is based on the depreciated replacement cost. With this method, the values for buildings and other improvements are determined by calculating the present-day replacement cost of putting up a similar and functional structure ready to provide the same facilities at the same place but depreciating them accordingly.

Changes in fair values are recognised in surplus or deficit and included in ‘other operating income’.

The impact of revaluing investment properties on surplus for the year is UGX 70 billion (2020: UGX 47 billion) as disclosed in the table above which also shows the reconciliation of the movement in the carrying amount of the investment property between the opening and closing dates.

Significant unobservable input Range (weighted average)

Office properties Estimated rental value UGX 3,788 million – UGX 10,655 million (UGX 7,221 million)Estimated rental expenditure UGX 1,273 million – UGX. 3,983 million (UGX. 2,628 million)Vacancy factor 4.35% – 4.49% (4.42%)Discount rate 7 – 9% (8%)

Land Price per acre UGX.57 million – UGX.5,618 million

Valuation techniques for investment properties:

Land Market Approach

Land was valued by the sales comparison method on the basis of its unimproved state taking into account the various categories of existing and potential use. Other factors such as location, services, accessibility, and proximity to suppliers, inputs and markets were also taken into account. Attention was paid to the concept of ‘Highest and Best use’ of property.

Buildings A combination of approaches was adopted to obtain reasonable estimations of the market values of buildings.

Income capitalisation approach

The valuers used this approach to estimate the value of income-producing buildings. It is based on the expectation of future benefits. This method of valuation relates value to the market rent that a property can be expected to earn and to the resale value.

Cost approach

Some of the buildings, structures and services were valued at current replacement costs taking into account their depreciation. This was applied for property that was constructed in the form of residential property or single use property.

Market approach

Some buildings were valued by the sales comparison method given that they were vacant at year end or by the nature of the buildings not necessarily being high rental value earners but are located in prime locations. Other factors such as location, services, accessibility, and proximity to prime locations were taken into account. Attention was paid to the concept of ‘Highest and Best use’ of property.

The fair value measurement for all of the investment properties has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used.



Key underlying assumptions in valuation of investment properties included:• Properties and their values are unaffected by any statutory notice or condition of title where title deeds were not inspected, and

that neither the property nor its condition, nor its use, nor its intended use, is or will be unlawful.• No onerous easements, rights of way or encroachments exist by or on the subject properties other than those in favour of

statutory bodies, applicable to all such properties, or which could be regarded as customary.• The market value and any other values referred to in the valuation report exclude Value Added Tax and transfer costs.• Property is unaffected by environmental issues.• Property is assumed to be free from any structural fault, rot, infestation or defects of any other nature whether exposed or

unexposed, including inherent weaknesses due to the use in construction of deleterious materials. There is also an assumption that there are no unidentified adverse ground or soil conditions and that the load bearing qualities of the site of each property are sufficient to support the building constructed or to be constructed thereon.

• The outbreak of the Novel Covid-19 was declared a global pandemic by the World Health Organization in January 2020. Due to this, the real estate market was affected and has changed due to several restrictions and regulations implemented by most governments in the world in efforts to curb the spread of this pandemic. As at year end, occupancy rates of some of the properties had decreased and this negatively impacted the valuation as disclosed.

The Fund generated rental income from its investment properties as shown below:

2021UGX 000

2020UGX 000

Workers House 4,720,418 4,963,396Social Security House 2,862,575 3,034,962Service Charge 2,103,951 2,123,826Others – Naguru, Mbarara and Jinja 863,423 1,003,478

10,550,367 11,125,662

The Fund incurred direct operating expenses (including repairs and maintenance) arising from investment properties that generated rental income during the year as shown below:


WorkersHouse

UGX 000

SocialSecurity

HouseUGX 000

Others –Naguru,

Mbararaand JinjaUGX 000

TotalUGX 000

Maintenance and repairs 1,290,858 117,308 133,237 1,541,403Ground & property rent 206,826 77,792 3,398 288,016Cleaning services 186,653 59,933 56,765 303,351Security services 462,394 124,434 49,815 636,643Electricity 835,162 154,896 111,123 1,101,181Water 277,297 185,173 19,786 482,256

3,259,190 719,536 374,124 4,352,850Year ended 30 June 2020Maintenance and repairs 1,671,183 463,266 136,105 2,270,554Ground & property rent 58,059 24,453 236 82,748Cleaning services 161,606 52,624 82,177 296,407Security services 536,787 146,427 57,940 741,154Electricity 635,148 267,133 19,658 921,939Water 236,793 163,869 19,071 419,733

3,299,576 1,117,772 315,187 4,732,535



The Fund incurred direct operating expenses (including repairs and maintenance) arising from investment properties which did not generate rental income during the period as shown below (no expenses were incurred on properties other than those indicated in the table below):

Year ended 30 June 2021Land in Lubowa

UGX 000

Land inTemangalo

UGX 000Land in Nsimbe

UGX 000Land in Kisugu

UGX 000Total

UGX 000

Security expenses 161,038 201,297 241,556 26,840 630,731Year ended 30 June 2020Security expenses 154,080 192,600 231,120 25,680 603,480

As at 30 June 2021, there were no restrictions on the realisability of investment property with the exception of LRV 2172 Folio 10, Plot 1 Pilkington Road which had a caveat. There was no restriction to the remittance of income and proceeds of disposal and there were no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance or enhancements.

The Fund has not entered into any finance lease arrangements and bears no encumbrances on its titles of ownership of the reported properties save for the above mentioned property. The Fund has several tenants on its properties including Workers House and Social Security House with tenancy agreements averaging three years in duration. The Fund maintains the properties and only charges a service fee to the tenants for auxiliary services and has, therefore, included these as investment properties in its financial statements.

Future minimum rentals receivable under non-cancellable operating leases are, as follows:

2021

Up to1 year

UGX 000

1 to 5years

UGX 000

Over 5years

UGX 000

Property rentals 7,582,993 37,914,965 –2020Property rentals 10,160,159 20,320,318 –

Liens: The Fund has two liens issued on treasury bonds as security for the construction of Pension towers as at 30 June 2021 valued at UGX 33 billion.

26. intangible assets

2021UGX 000

2020UGX 000

CostAt the beginning of the year 30,047,727 27,387,695Transfer from capital work-in-progress 63,833 2,030,860Additions 3,978,591 629,172At 30 June 34,090,151 30,047,727

AmortisationAt the beginning of the year 20,908,847 19,511,513Charge for the year 1,667,461 1,397,334At 30 June 22,576,308 20,908,847

Net carrying amount 11,513,843 9,138,880

Intangible assets mainly relate to software which makes up the Integrated Management Information System (IMIS) of the Fund.

Under capital work in progress, the Fund is currently implementing a new Pension Administration System (PAS) with a targeted go-live date of 1 November 2021.


27. Property and equipment

Land andBuildingsUGX 000

Office equipmentUGX 000

Motor VehiclesUGX 000

Furniture andFittings

UGX 000

Computers andElectronics

UGX 000TOTAL

UGX 000

CostAt 1 July 2019 – 4,126,172 8,238,452 11,840,396 16,358,932 40,563,952Transfer from CWIP – – – – 4,479,784 4,479,784Additions – 1,721,345 – 4,536,881 1,664,223 7,922,449Disposals – (116,688) – (153,161) (329,238) (599,087)Reclassification – – – (893,272) 893,272 –At 30 June 2020 – 5,730,829 8,238,452 15,330,844 23,066,973 52,367,098Additions – 1,135,757 2,672,911 998,932 3,230,130 8,037,730Disposals – (40,200) (707,995) (214,169) (747,585) (1,709,949)Transfer from investment properties

22,631,051 – – – – 22,631,051

Reclassification – 340,782 – 67,776 22,321 430,879At 30 Jun 2021 22,631,051 7,167,168 10,203,368 16,183,383 25,571,839 81,756,809

DepreciationAt 1 July 2019 – 3,225,795 5,363,849 4,674,081 14,735,309 27,999,034Charge for the year – 578,206 1,417,598 1,563,692 1,851,478 5,410,974Reclassification – – – (137,762) 137,762 –Disposals – (116,688) – (153,161) (329,238) (599,087)As at 30 June 2020 – 3,687,313 6,781,447 5,946,850 16,395,311 32,810,921Charge for the year – 773,073 924,203 1,703,900 2,626,621 6,027,797Reclassification – – – (137,762) 137,762 –Disposals – (40,200) (707,995) (214,169) (747,585) (1,709,949)At 30 June 2021 – 4,420,186 6,997,655 7,298,819 18,412,109 37,128,769

Net carrying amountAt 30 June 2021 22,631,051 2,746,982 3,205,713 8,884,564 7,159,730 44,628,040At 30 June 2020 – 2,043,516 1,457,005 9,383,994 6,671,662 19,556,177

During the year, the Fund transferred that portion of land or buildings that is owner occupied in respect of various mixed use properties.

28. Right of use assets

2021UGX 000

2020UGX 000

CostAt the beginning of the year 4,958,371 –Effect of adoption of IFRS 16 – 4,958,371Additions – –Modifications 144,146 –Disposals (56,649) –At 30 June 5,045,868 4,958,371DepreciationAt the beginning of the year 955,447 –Modifications (161,058) –Charge for the year 977,901 955,447Disposal (56,649) –At 30 June 1,715,641 955,447Net carrying amount 3,330,227 4,002,924

All right of use assets relate to office space lease arrangements for NSSF branches.


29. Tax claimable

2021UGX 000

2020UGX 000

At the beginning of the year 25,020,206 21,185,091Tax withheld at source during the year 4,244,556 3,835,115At 30 June 29,264,762 25,020,206

This relates to WHT tax withheld at source claimable from Uganda Revenue Authority.

30. Discontinued operations

In a Memorandum of Understanding that was signed by the Minister of Finance on 20 September 2019, Government of Uganda committed to avail the African Export-Import (Afreximbank) with land to host the headquarters for the East African Region.The Government identified the Fund’s land situated on Yusuf Lule Road as suitable for the project and therefore, intended to compensate the Fund in the Financial Year 2020/21 for its value so that the same can be availed to Afreximbank for the purpose.

On 4 March 2020, the Fund received a letter from the Minister requesting the Fund to dispose the said land to the Government/ Afreximbank and rescinding his earlier approval of the development of the Yusuf Lule land.

The matter was presented to the Fund’s Board of Directors on 12 March 2020 and among the resolutions included immediate disposal to the Government of Uganda 2.3 acres of the Yusuf Lule land. The Chairman subsequently wrote to the Minister of Finance, Planning and Economic Development to communicate the Board’s resolution on the matter. This land was disposed of during the Financial Year.

The performance realised from the disposed of Yusuf Lule land is presented below:

2021UGX 000

2020UGX 000

Rental income 478,983 605,009Expenses (13,951) (16,446)Operating income (Note 8) 465,032 588,563Profit before tax from a discontinued operation 465,032 588,563Tax expense* – –Profit for the year from discontinued operation 465,032 588,563

*As disclosed in Note 14(a) no tax expense arose on the discontinued operations due to the accumulated tax losses.

The Fund also conducted a review of its real estate portfolio and based on its strategic direction; it was resolved to dispose of the undeveloped properties below:

Status2021

UGX 000

Land in Kisugu Disposed 400,000Plot 87 Churchill Gulu Disposed 235,000

635,000Independence Avenue Arua Transferred to held for sale 260,000Pl677&678 Ndeba Kibuga Transferred to held for sale 468,000

728,0001,363,000

As at 30 June 2021, the Fund is actively looking for a purchaser for the remaining properties (Independence Avenue Arua and Ndeeba Kibuga).

Below is the movement in assets held for sale:

2021UGX 000

2020UGX 000

As at 01 July 16,631,516 –Disposal of Yusuf Lule land (16,631,516) –Transfer from Investment Property 728,000 16,631,516Closing 728,000 16,631,516


31. Other payables

2021UGX 000

2020UGX 000

Accounts payable 79,712,638 44,633,171Accrual for legal costs 3,478,426 6,156,864Lease liabilities 3,461,889 3,938,988WHT payable 167,727 165,078NARO payable 506,154 –Alcon provision 814,522 814,522

88,141,356 55,708,623

Set out below are the carrying amounts of lease liabilities and the movements during the period:

2021UGX 000

2020UGX 000

At 1 July 3,938,988 4,681,939Modifications 326,309 –Disposal (46,884) –Accretion of interest 454,026 519,721Repayments (1,210,550) (1,262,672)At 30 June 3,461,889 3,938,988

Leases

The Fund has entered into commercial leases for premises. The leases have an average life of between three and six years. The Fund is restricted from assigning and subleasing the leased assets.

The maturity analysis of lease liabilities is disclosed below:

2021UGX 000

2020UGX 000

Maturity periodDue within 1 year 1,175,589 591,640Due with 1 to 5 years 2,286,300 3,347,348Due over 5 years – –Total liability 3,461,889 3,938,988

The maturity analysis of the lease liabilities for purposes of IFRS 7 is disclosed in Note 40(b) as part of other payables.

The following are the amounts recognised in the statement of changes in net assets available for benefits:

2021UGX 000

2020UGX 000

Interest expense on lease liabilities 454,026 519,721Depreciation expense of right-of-use assets 977,901 955,447

1,431,927 1,475,168


32. Contract liabilities

2021UGX 000

2019UGX 000

Advance payments for housing (a) 3,334,300 8,786,702Advance payments for activities (b) 4,803,350 588,421Deferred rental income (c) 883,040 536,298

9,020,690 9,911,421

a) Advance payments for housing

These relate to Mbuya housing project. The project comprises 40 high-end apartments with amenities like a swimming pool, fully equipped gym, a club house and 24-hour CCTV surveillance.

The housing project was completed and commissioned in December 2019. Currently, bookings are being made by prospective buyers and this amount relates the amount received as booking fees for these apartments. The deposits are 10% of the value of each unit.

b) Advance payments for activities

The Fund has over the past years engaged in a number of corporate social responsibility initiatives, such as the Annual Torch Awards through which individuals or community-based organisations that are making a positive impact on the community are rewarded; Friends with Benefits Campaign - an initiative through which the Fund promotes savings by showcasing inspirational stories of savers who received their NSSF benefits and sustainably used them to do something life changing for themselves, their families or their community; blood donation drives in partnership with Ministry of Health and Uganda Blood Transfusion Services, the Annual Dental Camp at Mulago Hospital in partnership with Rotary Kampala North, the NSSF Kampala Hash 7 Hills Run, an initiative through which the Fund will progressively raises funds to improve learning conditions in public schools among others.

The Fund in conducting these activities partners with several other organisations through sponsorship arrangements where collections of funds for the activities are made prior to the execution of the activities and ultimately channelled to the respective beneficiaries. This balance relates to funds received in advance before activities are done or funds not yet channelled to the respective beneficiaries

c) Deferred rental income

The Fund collects an equivalent of one month’s rent from its tenants which acts as a security deposit in case the tenant leaves behind damages when exiting the buildings. When a tenant leaves and the Fund deems that all is well with the property, the security deposit is then refunded to the tenant. Otherwise, the deposit is used to repair any damages.

The Fund also bills and receives rental payments from some of its tenants for periods after the year-end. These amounts are not recognized as revenue during the financial year in which they are billed/received since they relate to the subsequent period.


33. member liabilities

a) Accumulated member fund

2021UGX 000

2020UGX 000

At the beginning of the year 13,062,237,946 11,138,207,557Contributions received during the year 1,325,195,875 1,271,505,205Transfer of NARO RBS to NSSF (Note 34) 42,125,716 –Interest on arrears 2,419,884 4,943,492Interest allocation for the year 1,509,542,014 1,143,993,088Members’ fund liability before benefit payments 15,941,521,435 13,558,649,342

Benefits paid during the yearAge benefits (245,952,222) (205,162,623)Withdrawal benefits (197,655,512) (156,323,670)Exempted employee benefits (70,484,535) (45,227,286)Invalidity benefits (50,075,865) (33,742,996)Survivors benefits (14,507,827) (8,012,301)Emigration grant benefits (63,648,141) (47,942,520)Total benefits payments (642,324,102) (496,411,396)At 30 June 15,299,197,333 13,062,237,946

b) Accumulated surplus

Note2021

UGX 0002020

UGX 000

Opening accumulated surplus 13,646,227 10,750,624Share of prior year associate adjustments 22 – 6,186,716Net increase in the Fund for the year transferred to accumulated surplus account

2,230,346,288 1,926,178,578

Net dealings with members (724,997,489) (775,093,809)Interest for the year payable to members (1,516,465,407) (1,154,269,188)Closing accumulated surplus 2,529,619 13,646,227

c) Interest allocated to members:Prior year over provision of interest to members 471,305 (4,368,530)Interest for the year payable to members 1,516,465,407 1,154,269,188Total interest available to members 1,516,936,712 1,149,900,658Allocated as follows:To members fundsOpening provision balance 471,305 (4,368,530)Interest for the year payable to members 1,509,070,709 1,148,361,618

1,509,542,014 1,143,993,088To reservesInterest for the year payable to members 7,394,698 5,907,570Total provision 1,516,936,712 1,149,900,658

Member liabilities (continued)

The accumulated members’ funds are made up of members’ accounts which comprise all standard, voluntary and supplementary contributions and interest on the contributions less benefits paid in accordance with Section 34 (1) of the National Social Security Fund Act, (Cap 222).

Interest payable to members is declared by the Minister for Finance in accordance with section 35 (2) of the National Social Security Fund Act, (Cap 222). For the year ended 30 June 2021, the Minister for Finance, Planning & Economic Development approved an interest rate of 12.15% (2020: 10.75%) to be calculated and added to the members’ funds.

Included in the accumulated members’ fund balance is UGX 45 billion (2020: UGX 42.3 billion), which relate to collections received from employers that have not yet been allocated to individual member accounts due to incomplete details of the members.


34. Transfer of naro retirement benefit scheme (RBS) to NSSF

On 18 March 2020, the Fund held a meeting with the National Agricultural Research Organization Retirement Benefits Scheme (NARO RBS to explore ways in which the NARO RBS could be transferred to NSSF.

In the meeting, the Chairperson of the trustees of NARO RBS gave a history of the NARO RBS. He observed that members elected to join the Fund at an Annual General Meeting of the NARO RBS in November 2018.

The transfer of NARO RBS to NSSF obtained approval from the NSSF board and a no objection from the regulator (URBRA). On 01 July 2020, the Fund registered and recognised with NSSF the hitherto members of the NARO RBS with cumulative benefits of UGX 42 billion in exchange for assets of the same value.

The Fund accounted for this as a transfer of assets and liabilities for financial reporting purposes.

Below is the breakdown of the transition value of the assets assumed by the Fund;

Note2021

UGX 000

Cash at bank 15 247,752Debt instruments at amortised cost 19 26,161,752Fixed deposits 16 2,174,802Equity securities 20 4,434,855Dividend receivable on equity instruments 82,185Investment properties 25 9,860,462Total assets 42,961,808Members funds (42,125,576)Payable to NARO 836,232

The payable to NARO relates to members who are deceased or could not be located for registration with the Fund.


35. Members reserve accounts

Unallocated members’ contributions

2021UGX 000

2020UGX 000

At the beginning of the year 60,861,713 54,954,143Provision for interest on unallocated members’ contributions 7,394,699 5,907,570

68,256,412 60,861,713

The movement in the provision for interest on unallocated members’ contributions was as follows:

2021UGX 000

2020UGX 000

At the beginning of the year 36,269,212 30,361,642Charged to surplus or deficit 7,394,699 5,907,570At 30 June 43,663,911 36,269,212

As at 30 June 2021, the Reserve account included unallocated members’ contributions and interest thereon amounting to UGX 68 billion (2020: UGX 61 billion), comprising contributions amounting to UGX 24.6 billion (2020 UGX 24.6 billion) and interest thereon amounting to UGX 42.7 billion (2020: UGX 36.1 billion).

The unallocated members’ contributions amounted to UGX 360 billion as at 30 June 2007. This prompted management to undertake measures to identify the respective members whom the amounts belonged to and as a result, the unallocated amounts gradually reduced over the years to UGX 24.6 billion as at 30 June 2012. The directors believe that, in addition to putting in place measures to curtail the growth of the unallocated amounts, the Fund had exhausted all possible measures to identify the members whom these amounts belonged to and accordingly resolved to transfer the unallocated contributions balance of UGX 24.6 billion from the accumulated members’ funds to the reserve account in accordance with Section 36 (1) (b) of the NSSF Act.

In the event that a member of the Fund presents adequate documentation proving that these contributions should be credited to their individual members account, NSSF will transfer the contributions from the reserve account to the members’ account following approval by the Minister of Finance as stipulated in Section 36 (2) of the NSSF Act. During the year, there was no transfer of funds from the accumulated members’ funds to the reserve account and vice versa. However, as stated in note 33 above, interest was accrued on these balances and credited in the reserve account accordingly.


36. Net cash (used in)/ generated from operating activities

Note2021

UGX 0002020

UGX 000

Surplus before income tax from continuing operations net of dealings with members

1,672,312,046 1,303,545,245

Surplus before income tax from discontinued operations 30 465,032 588,563Total surplus income before tax 1,672,777,078 1,304,133,808Depreciation on property and equipment and right of use assets 27 and 28 7,005,698 6,366,421Gain on disposal of investment property 8 (8,519,539) –Increase in allowance for expected credit losses 10 476,260 3,392,944Amortisation of intangible assets 26 1,667,461 1,397,334Fair value gain on associates 22 (23,215,399) (22,122,997)Staff loans fair value adjustment 21 (25,230) (73,070)Unrealised foreign exchange losses on equity investments internally managed

20 78,918,785 18,877,869

Unrealised foreign exchange losses on debt instruments at amortised cost

19 222,777,935 150,962,821

Unrealised foreign exchange (gains)/ losses on externally managed investments

18 (147,776) 1,944,178

Unrealised foreign exchange losses on deposits with commercial banks 16 340,681 2,093,067Fair value gains on investment properties 25 (69,784,516) (46,929,148)Fair value (gains)/ losses on equity investments externally managed 18 (11,194,583) 7,581,995Fair value gains on equity investments internally managed 20 (328,960,909) (22,844,349)Finance costs charged to lease Liabilities 31 454,026 519,721Interest income on loans and advances 21 (1,667,244) (2,188,691)Interest income on debt instruments at amortised cost 19 (1,583,603,094) (1,375,196,943)Interest income on commercial bank deposits 16 (19,431,646) (21,382,495)Provision for litigation – 7,481Changes in working capitalInventories 50,704,520 –Trade and other receivables 17 (18,186,546) 16,327,257Withholding tax claimable (4,244,556) (3,835,115)Other payables 32,432,732 1,676,579Net cash (used in)/ generated from operating activities (102,834,902) 20,997,483


37. Related party disclosures

The Fund is controlled by Government of Uganda pursuant to powers conferred upon it in the NSSF Act, including the power to appoint members of the Board of Directors, to approve investments of the Fund and to approve its annual budget. There are other companies that are related to the Fund through common shareholdings and/or directorships.

The following transactions were carried out with related parties with which the Fund shares common ownership and/or directorships:

a) Interest income

2021UGX 000

2020UGX 000

(i) Housing Finance Bank Uganda LimitedInterest income on loans and advances 1,602,666 2,188,692Interest income on term deposits 11,137,500 11,168,014

12,740,166 13,356,706

(ii) Government of UgandaInterest income on treasury bonds 1,576,449,595 867,383,375

1,589,189,761 880,740,081

b) Income tax expenseGovernment of UgandaIncome tax expense for the year 167,428,279 153,049,039

c) Key management compensation

2021UGX 000

2020UGX 000

Salaries and short-term benefits 6,105,170 6,078,761Directors’ remuneration (Note 37 (d)) 1,420,147 954,801Post-employment benefits 1,170,759 1,147,628

8,696,076 8,181,190

The amounts disclosed above are the amounts recognised as an expense during the reporting period related to key management personnel and Directors.

d) Directors’ remuneration

2021UGX 000

2020UGX 000

Directors’ remuneration (included in key management compensation above)1,420,147 954,801

e) Bank balances with related partiesHousing Finance Bank Uganda Limited 60,331 115,129

f) Loans and advances due from related parties2021

UGX 0002020

UGX 000Housing Finance Bank Uganda Limited 11,342,820 15,009,486Uganda Clays Limited 20,592,838 20,592,838Staff loans to key management staff 359,061 385,909

32,294,719 35,988,233

g) Fixed deposits with related partyHousing Finance Bank Uganda Limited 80,903,663 80,456,041


37. Related party disclosures (continued)

h) Dividends due from related parties

2021UGX 000

2020UGX 000

Housing Finance Bank Uganda Limited 6,206,823 –Uganda Clays Limited 395,064 –Umeme Limited 4,593,357 13,121,263

11,195,244 13,121,263

i) Debt instruments with related partiesGovernment of Uganda 6,927,813,884 6,047,383,422

The Government has 100% control of the Fund. The Fund invests in treasury bonds issued by the Government which have the terms and conditions disclosed in Note 19. Other significant related party transactions with the Government of Uganda include utility costs and rental income earned from government ministries that occupy the Fund’s properties. Rental income for the year amounted to UGX 4 billion (2020: UGX 5 billion).

38. Contingent liabilities

The Fund is a litigant in various cases arising in the normal course of business. The Directors are of the opinion based on independent legal advice that the outcome of these cases will not give rise to any significant loss beyond the amounts provided.

The Directors have identified the following outstanding legal cases for additional disclosure:

a) The Fund objected to a tax assessment by Uganda Revenue Authority (URA) on 15 April 2013 on the grounds that URA’s tax computations wrongly disallowed expenses that are deductible for tax purposes. Management believes the tax treatment adopted by NSSF is in accordance with the provisions of Section 22(1)(a) and Section 25 of the Income Tax Act which allows a deduction for interest incurred during the year of income in respect of a debt obligation. Guidance received from the URA in 2001 allowed for these expenses to be deductible for tax purposes. There have been no changes to those sections of the Income Tax Act. The Fund has treated the interest incurred in the past in exactly the same way.

The Fund filed a suit with the High Court Commercial Division to challenge the assessment. During the mediation process, both parties agreed to reduce the taxes in dispute from UGX.84.4 billion to UGX.42.2 billion. In March 2020, the Tax Appeals Tribunal delivered its ruling in favour of the URA. The Fund through its lawyers successfully appealed against this Ruling of the Tribunal. On 2 November 2020 the High Court Commercial Division ruled in favour of the fund. URA has since applied to the High Court for leave to appeal against the ruling. A decision on whether URA will be given leave to appeal is yet to be delivered as at the date of approval of these financial statements. The Fund’s legal advisors have indicated that there is a strong basis for the Fund to challenge any appeal. Therefore, the Directors have not recognised any provisions in respect to this matter.

In accordance with the Income Tax Act, the Fund was required to pay a deposit of 30%of the assessed tax as disclosed in Note 14 (c). Payment of this deposit is not an admission of guilt but purely a statutory payment.

b) The Fund is also a defendant on various legal actions arising from its investment property.

The Directors have considered the cases below to be of significance hence the relevant disclosures.

Temangalo tea estates limited

The Fund was jointly sued alongside other parties by Temangalo Tea Estates Limited in respect of all the land held by the Fund at Temangalo. Following dismissal of the suit by the High Court, the plaintiffs in the matter lodged an appeal at the Court of appeal.

Whereas the matter has not yet been fixed for hearing, the Directors are of the opinion that the outcome of this matter will not amount in significant cash outflow to the Fund and as such no provision has been made in respect of the matter.

In addition, NSSF was jointly sued in connection with all the land held by it and Nsimbe Estate. The matter is yet to be heard in court. The Directors are of the opinion based on professional legal advice that the outcome of these cases will not give rise to any significant loss beyond the amounts provided.


39. Use of estimates and judgementsThe preparation of financial statements in conformity with International Financial Reporting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The estimates and associated assumptions are based on historical experiences, the results of which form the basis of making the judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results ultimately may differ from these estimates.

The accounting policies that involve high judgement in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are:

Provision for expected credit losses of financial assets – The Fund annually assess all financial assets for impairment i.e Cash and cash equivalents, debt instruments and receivables. The Fund uses the simplified approach to impair receivables or groups of receivables as might be appropriate based on its average historical loss rate. Depending on the data, the Fund applies either of two ways of computing the loss rate per period. A loss rate may be computed as the ratio of outstanding invoice amounts beyond the default period and raised invoices at the beginning of each period. In the case where payments are available, the recovery rate may be computed as a ratio of payments made on bills raised per time period before the default date. The loss rate is then obtained as 1 – recovery rate. A common approximation is to cap recovery rates at 100% where payments exceed invoice amounts. The single loss rate is adjusted for forward-looking factors specific to the debtors and the economic environment using movements and forecasts for inflation rates, GDP and foreign exchange. The single loss rate estimates are applied to each category of gross receivables. The Fund assesses the impact of Covid on individual customers utilises this model to stage each receivable.

The Fund considers whether ECLs should be estimated individually for any period-end receivables, e.g because specific information is available about those debtors.

The Fund has applied the simplified approach to all other financial assets recognised as other receivables e.g dividends receivable, an approach that does not include an explicit probability of default as an input per se. The information about the ECLs on the Fund’s trade and other receivables is disclosed in Note 17. Further information on impairment is disclosed in Notes 40(c).

Estimation of expected credit loss on government treasury bills and bonds, corporate bonds, deposits with commercial banks is determined by getting a predefined default rate relating to the issuer of the bills and bonds and the bank where the cash is held, respectively, as established by one of the top credit rating agents namely Standards and poor’s, Fitch and Moody’s.These default rates are then used to estimate the expected credit losses on the outstanding amounts of the above respective financial assets.

The loans and advances held by the Fund are mainly with corporate entities and has, therefore, used credit rating agency information rather than internal risk weighting methods. The information about the ECLs on the Fund’s deposits with commercial banks, government treasury bills and bonds and corporate bonds and Loans and advances is disclosed in Notes 16,19 and 21, respectively.

(i) Impairment of non-financial assets – Impairment exists when the carrying amount of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Fund is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested.

The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The Fund also assessed impairment for the assets and no additional impairments were required. The Fund’s non-financial assets include inventories, capital work in progress, investment properties, intangible assets, property and equipment and right of use assets with carrying amounts as disclosed in notes 23,24,25,26,27 and 28 respectively.


39. Use of estimates and judgements (continued)

(ii) Current income taxes – uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. The Fund establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the Fund and the tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing. Details on the current income tax amounts recognised in the financial statements are disclosed in Note 14.

(iii) Property and equipment and right of use assets – Critical estimates are made by the management in determining the useful lives and residual values to property and equipment based on the intended use of the assets and the economic lives of those assets. Subsequent changes in circumstances or prospective utilisation of the assets concerned could result in the actual useful lives or residual values differing from initial estimates. Details of the Fund’s property and equipment and right of use assets are disclosed in note 27.

(iv) Determining fair values – The determination of fair value for financial assets for which there is no observable market price requires the use of valuation techniques. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. Further information on determination of fair value is disclosed in Notes 25, and 41.

(v) Assets held for sale – The Board approved the disposal of Arua and Ndeeba land. Below are the key judgments.

• The plots of land are available for immediate sale and can be sold to the buyer in there current condition• The actions to complete the sale were initiated and expected to be completed within one year from the date of initial

classification• The Fund is actively looking for buyers and as such sale will be completed within one year from the date of initial classification

For more details on the discontinued operation, refer to Note 30.

(vi) Provisions and contingencies – A provision is recognized if, as a result of past events, the Fund has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Management has made judgements in determining the provisions presented in Note 31 and contingencies disclosed in Note 38.

(vii) Valuation of investment properties and capital work in progress – The Fund carries its investment properties and capital work in progress at fair value, with changes in fair value being recognised in surplus or deficit. Details of significant estimates and judgements made regarding the Fund’s investment properties and capital work in progress are disclosed in Notes 25 and 24 respectively.


40. Financial risk management

The Fund has exposure to the following risks from its use of financial instruments:

• Market risk;• Liquidity risk;• Credit risk; and• Capital management risk.

Included below is information about the Fund’s exposure to each of the above risks, the Fund’s objectives, policies and processes for measuring and managing the risks and the Fund’s management of capital.

Risk management framework

The Fund’s Board of Directors has overall responsibility for the establishment and oversight of the Fund’s risk management framework. The Board has established an Audit and Risk Committee, and the Risk Department, which are responsible for developing and monitoring the risk management policies in their specified areas. All Board committees have both executive and non-executive members and report regularly to the Board of Directors on their activities.

The Fund’s risk management policies are established to identify and analyse the risks faced by the Fund, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and services offered. The Fund through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations.

The Fund’s Audit and Risk Committee is responsible for monitoring compliance with the Fund’s risk management policies and procedures, and for reviewing the adequacy of the risk management framework in relation to the risks faced by the Fund. The Audit and Risk Committee is assisted in these functions by Internal Audit and Risk functions. Internal Audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the Audit and Risk Committee.

a) Market risk

Market risk is the risk that changes in market prices, such as equity prices, interest rates and foreign exchange rates will affect the Fund’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within the acceptable parameters, while optimising the return on investment.

Management of market risks

Market risk arises from a decrease in the market value of a portfolio of financial instruments caused by adverse movements in the market variables such as equity, bonds, currency exchange rates and interest rates.

The Board grants authority to take on market risk exposure to the Management Investment Committee (MIC). This committee manages this risk through the guidelines set out in the Fund’s investment policy.

Equity price risk

The Fund is exposed to equity securities price risk through its investments in quoted and unquoted shares. The Fund’s Investment committee diversifies its portfolio. Diversification of the portfolio is done in accordance with the guidelines set out in the Fund’s investment policy. Except for shares held in Eastern and Southern African Trade and Development Bank (TDB Bank), Housing Finance Bank, Yield Fund and TPS Uganda Limited all shares held by the Fund are valued based on market prices.


40. Financial risk management (continued)a) Market risk (continued)

The table below shows the effect of share price sensitivity on the surplus before income tax based on the share price volatility as at 30 June:

Type of Investment

Change inshare price %

UGX 000

Effect on surplusbefore tax and reserves

UGX 000

2021Equity securities externally managed +/-5% +/- 5,205,480Equity investments internally managed +/-5% +/- 94,997,5192020Equity securities externally managed +/-5% +/-4,383,124Equity investments internally managed +/-5% +/-73,158,835

Currency risk

The Fund is exposed to currency risk through transactions in foreign currencies. The Fund transactional exposures give rise to foreign currency gains and losses that are recognised in the statement of changes in net assets available for benefits. In respect of monetary assets and liabilities in foreign currencies, the Fund ensures that its net exposure is kept to an acceptable level by matching foreign currency assets to liabilities when considered appropriate. Monitoring of foreign currency fluctuations is done through the Management and Investment Committee. The Fund operates wholly within Uganda and its assets and liabilities are reported in Uganda Shillings, although it maintains some of its assets and trades with banks in foreign currencies.

The Fund had the following foreign currency positions as at 30 June 2021. All balances are in UGX 000’s.

USD Kshs Tshs Rwf Total

Financial assetsCash and bank balances 27,825,331 2,096,530 5,322,395 1,111,615 36,355,871Deposits due from commercial banks 3,949,847 – – – 3,949,847Equity securities externally managed – 76,620,221 13,949,671 – 90,569,892Trade and other receivables 3,736,613 11,128,442 – 2,075,656 16,940,711Debt instruments at amortised cost – 2,866,142,469 1,344,274,713 29,220,266 4,239,637,448Equity investments internally managed 155,782,636 1,107,302,458 472,392,116 36,415,020 1,771,892,230Total assets 191,294,427 4,063,290,120 1,835,938,895 68,822,557 6,159,345,999Financial liabilitiesOther payables – – – – –

– – – – –Currency gapAt 30 June 2021 191,294,427 4,063,290,120 1,835,938,895 68,822,557 6,159,345,999

The Fund had the following foreign currency positions as at 30 June 2020. All balances are in UGX 000’s

USD Kshs Tshs Rwf Total

Financial assetsCash and bank balances 1,757,553 1,147,456 9,440,446 1,371 12,346,826Deposits due from commercial banks – – – 1,072,348 1,072,348Equity securities held-for-trading – 61,660,083 12,246,732 – 73,906,815Trade and other receivables 3,815,238 17,017,125 86,356 2,360,943 23,279,662Debt instruments at amortised cost – 2,564,586,306 1,322,948,785 28,107,262 3,915,642,353Equity investments internally managed 139,131,656 731,619,676 422,799,269 43,354,675 1,336,905,276Total assets 144,704,447 3,376,030,646 1,767,521,588 74,896,599 5,363,153,280Financial liabilitiesOther payables – – – – –

– – – – –Currency gapAt 30 June 2020 144,704,447 3,376,030,646 1,767,521,588 74,896,599 5,363,153,280


40. Financial risk management (continued)a) Market risk (continued)

The table below indicates the currencies to which the Fund had significant exposure at 30 June on its non-trading monetary assets and liabilities and its forecast cash flows. The analysis shows the effect of a reasonably possible movement of the currency rate against the Uganda Shilling, with all other variables held constant, on the statement of changes in net assets available for benefits (due to the fair value of currency sensitive non-trading monetary assets and liabilities). A negative amount in the table reflects a potential net reduction in the surplus for the year and equity, while a positive amount reflects a net potential increase. An equivalent decrease in each of the currencies below against the Uganda Shilling would have resulted in an equivalent but opposite impact.

Currency

Change incurrency rate

in % Effect on surplus before

tax and reserves

Change incurrency rate

in % Effect on surplus before

tax and reserves

2021 2021UGX 000

2020 2020UGX 000

USD +/-5% +/- 9,564,471 +/-5% +/- 7,235,222KES +/-5% +/- 203,164,506 +/-5% +/-168,801,532TZS +/-5% +/- 91,796,945 +/-5% +/-88,376,079RWF +/-5% +/- 3,441,128 +/-5% +/- 3,744,830

The following exchange rates applied during the year:

Average rate Reporting date spot rate

2021UGX

2020UGX

2021UGX

2020UGX

KES 33.60 35.87 33.0045 35.02USD 3656.39 3720.82 3561.5 3729.00TZS 1.58 1.62 1.537 1.61RWF 3.72 3.99 3.5701 3.92

Interest rate risk

In broad terms, interest rate risk is the risk that concerns the sensitivity of the Fund’s financial performance to changes in interest rates. The Fund’s operations are subject to the risk of interest rate fluctuations to the extent that interest earning assets and interest-bearing liabilities mature or re-price at different times or in differing amounts. Risk management activities are aimed at optimizing net interest income, given market interest rates levels consistent with the Fund’s business strategies. In order to minimize interest rate risk, the Fund has a policy whereby the approved investment commitments are matched to members’ funds.

The Fund does not account for any fixed rate or variable rate financial assets at fair value through profit or loss. Therefore, a change in interest rate at the reporting date will not affect the Fund’s surplus or deficit but would change the future performance of the Fund. The financial assets held at variable interest rates relate to the corporate bonds for African Development Bank (ADB). These balances are not significant when compared with the total financial assets of the Fund as at year-end, hence a change of 1 basis point in the interest rate for these instruments would have an insignificant effect on the statement of changes in net assets available for benefits.

The table below summarizes the exposure to interest rate risk. Included in the table are the Fund’s assets and liabilities at carrying amounts, categorized by the earlier of contractual re-pricing dates and the maturity dates. All balances are in UGX 000.


40. Financial risk management (continued)a) Market risk (Continued)

2021Assets

<3 monthsUGX 000

3-12 monthsUGX 000

> 1 yearUGX 000

Non-Interestbearing

UGX 000Total

UGX 000

Cash and bank balances 69,180,720 – – 11,655,093 80,835,813Deposits with commercial banks 54,072,543 118,686,318 31,950,610 – 204,709,471Trade and receivables – – – 62,741,376 62,741,376Debt instruments at amortised cost 876,161,244 1,897,906,592 8,782,153,464 – 11,556,221,300Loans and advances – – 11,704,035 – 11,704,035Total assets 999,414,507 2,016,592,910 8,825,808,109 74,396,469 11,916,211,996

LiabilitiesOther payables – – – (86,652,953) (86,652,953)Total liabilities – – – (86,652,953) (86,652,953)Gap as at 30 June 2021 999,414,507 2,016,592,910 8,825,808,109 (12,256,484) 11,829,559,042

2020Assets

<3 monthsUGX 000

3-12 monthsUGX 000

> 1 yearUGX 000

Non-Interestbearing

UGX 000Total

UGX 000

Cash and bank balances 14,394,296 – – 11,627,799 26,022,095Deposits with commercial banks 55,728,952 57,059,180 90,369,141 – 203,157,273Trade and receivables – – – 37,072,771 37,072,771Debt instruments at amortised cost 759,449,366 1,645,089,838 7,612,298,457 – 10,016,837,661Loans and advances – 15,382,874 – – 15,382,874Total assets 829,572,614 1,717,531,892 7,702,667,598 48,700,570 10,298,472,674

LiabilitiesOther payables – – – (54,729,023) (54,729,023)Total liabilities – – – (54,729,023) (54,729,023)Gap as at 30 June 2020 829,572,614 1,717,531,892 7,702,667,598 (6,028,453) 10,243,743,651

b) Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with its financial liabilities. It includes both the risk of being unable to fund assets at appropriate maturities and rates and the risk of being unable to liquidate an asset at a reasonable price and in an appropriate timeframe.

Management of liquidity risk

The Fund has access to a diverse funding base. Funds are raised mainly from members’ contributions and reserves. The Fund continually assesses liquidity risk by identifying and monitoring changes in funding required in meeting business goals and targets set in terms of the overall Fund strategy. In addition, the Fund has a Management Investment Committee that meets on a regular basis to monitor liquidity risk, review and approve liquidity policies and procedures.

Exposure to liquidity risk

The table below analyses financial assets and financial liabilities into relevant maturity groupings based on the remaining period at 30 June 2021 to the contractual maturity date. All balances are in UGX 000.


40. Financial risk management (continued)b) Liquidity risk (continued)

At 30 June 2021MaturedUGX 000

<3 monthsUGX 000

3-12 monthsUGX 000

1-5 yearsUGX 000

> 5 yearsUGX 000

TotalUGX 000

Financial assetsCash and bank balances

80,835,813 – – – – 80,835,813

Deposits with commercial banks

– 54,072,543 118,686,318 31,950,610 – 204,709,471

Trade and other receivables

– 62,741,376 – – 62,741,376

Debt instruments at amortised cost

– 450,767,665 1,587,155,962 7,736,555,916 17,528,734,314 27,303,213,857

Loans and advances – – – – 11,704,035 11,704,035Total financial assets 80,835,813 504,840,208 1,768,583,656 7,768,506,526 17,540,438,349 27,663,204,552

Financial liabilitiesOther payables – (79,712,631) (4,472,356) (2,467,966) – (86,652,953)Financial liabilities – (79,712,631) (4,472,356) (2,467,966) – (86,652,953)Liquidity gap 80,835,813 425,127,577 1,764,111,300 7,766,038,560 17,540,438,349 27,576,551,599

At 30 June 2020MaturedUGX 000

<3 monthsUGX 000

3-12 monthsUGX 000

1-5 yearsUGX 000

> 5 yearsUGX 000

TotalUGX 000

Financial assetsCash and bank balances

26,022,095 – – – – 26,022,095

Deposits with commercial banks

– 55,734,513 57,603,616 103,452,378 – 216,790,507


– 37,072,771 – – 37,072,771

Debt instruments at amortised cost

– 759,449,366 1,645,089,838 6,779,105,301 14,224,957,177 23,408,601,682

Loans and advances – – 16,486,562 859,444 130,275 17,476,281Total financial assets 26,022,095 815,183,879 1,756,252,787 6,883,417,123 14,225,087,452 23,705,963,336

Financial liabilitiesOther payables – (27,934,519) (23,508,994) (4,381,094) – (55,824,607)Financial liabilities – (27,934,519) (23,508,994) (4,381,094) – (55,824,607)Liquidity gap 26,022,095 787,249,360 1,732,743,793 6,879,036,029 14,225,087,452 23,650,138,729

c) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Fund is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including investments in investments in government and corporate bonds, loans and advances deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. For risk management reporting purposes, the Fund considers all elements of credit risk exposure such as individual obligator default risk, country and sector risk.

For risk management purposes, credit risk arising on trading securities is managed independently, but reported as a component of market risk exposure.


40. Financial risk management (continued)c) Credit risk (continued)

Management of credit risk

The Board of Directors has delegated responsibility for the management of credit risk to its Management Investment Committee. The Investments Department is responsible for oversight of the Fund’s credit risk, including:

• Formulating credit policies, covering collateral requirements and credit assessments, risk grading and reporting. Documentary, legal procedures and compliance with regulatory and statutory requirements is done in consultation with the Fund’s Legal and Compliance Department.

• Establishing the authorisation structure for the approval and renewal of credit facilities. Authorisation limits are allocated to the Management Investment Committee. Larger facilities require approval by the Board of Directors as appropriate.

• Reviewing compliance of investment mix with agreed exposure limits, including those for selected industries, country risk and product types. The Fund’s Investment Committee is responsible for monitoring the credit quality of investments and ensuring that appropriate corrective action is taken and providing advice, guidance and specialist skills to business units to promote best practice throughout the Fund in the management of credit risk.

The Investment department is required to implement the Fund’s credit policies and procedures, with credit approval authorities delegated from the Fund’s Board of Directors. The Investment department is responsible for the quality and performance of the Fund’s investment portfolio and for monitoring and controlling all credit risks in the Fund’s portfolio, including those subject to Board approval.

Regular audits of the Investment department and the Fund’s credit processes are undertaken by the Internal Audit department.

Exposure to credit risk

Debt instruments at amortised cost and cash deposits

The Fund’s maximum exposure to credit risk for the components of the statement of net assets available for benefits at 30 June 2021 and 30 June 2020 is the carrying amounts or the principal deposits plus accrued interest.

For debt instruments at amortised cost, which mainly relate to government debt securities issued by sovereign governments in their local currencies i.e. Uganda, Kenya, Tanzania, Rwanda and no history of default, the Fund applies the low credit risk simplification.

|n the absence of default history on government securities, cash at bank and term deposits, the Fund has applied probabilities of default for instruments with financial credit risk. Furthermore, a loss given default rate has been assumed for these instruments given that they are not secured.

At every reporting date, the Fund evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Fund reassesses the internal credit rating of the debt instrument. In addition, the Fund considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due. The Fund also uses the ratings from the Standard & Poor, Moody’s and Fitch to determine whether the debt instruments have significantly increased in credit risk and to estimate ECLs

The Fund measures ECL on these instruments on a 12-month basis. However, when there has been a significant increase in credit risk since origination, the allowance is based on the lifetime ECL.

The credit risk for all the amortised cost financial assets has not increased significantly since initial recognition, therefore the Fund has measured the loss allowance for these financial assets at an amount based on lifetime.


40. Financial risk management (continued)c) Credit risk (continued)Exposure to credit risk (continued)

The resultant ECLs on staff loans and cash at bank are immaterial.

The maximum exposure to credit risk at the reporting date is as disclosed in below;

2021UGX 000

2020UGX 000

Cash and bank balances 80,737,283 25,981,725Deposits with commercial banks 204,709,471 203,157,273Trade and other receivables 62,741,376 37,072,771Debt instruments at amortised cost 11,556,221,300 10,016,837,661Loans and advances 11,704,035 15,382,874

11,916,113,465 10,298,432,304

Set out below is the information about the credit risk exposure on the deposits with commercial banks, government and corporate bonds and loans and advances as at 30 June:

Note Gross amount ECL Carrying amount

UGX 000 UGX 000 UGX 000

At 30 June 2021Cash and bank balances 80,737,283 – 80,737,283Deposits with commercial banks 16 206,437,084 (1,727,613) 204,709,471Debt instruments at amortised cost 19 11,560,627,399 (4,406,099) 11,556,221,300Loans and advances 21 32,447,140 (20,743,105) 11,704,035

11,880,248,906 (26,876,817) 11,853,372,089

NoteGross amount

UGX 000ECL

UGX 000Carrying amount

UGX 000

At 30 June 2020Cash and bank balances 15 25,981,725 – 25,981,725Deposits with commercial banks 16 204,671,968 (1,514,695) 203,157,273Debt instruments at amortised cost 19 10,020,930,565 (4,092,904) 10,016,837,661Loans and advances 21 36,175,832 (20,792,958) 15,382,874

10,287,760,090 (26,400,557) 10,261,359,533

Movements in the allowance have been disclosed in Notes 15, 16,19,21.


An impairment analysis is performed at each reporting date using a single loss rate approach to measure expected credit losses. Under the loss rate approach, the Fund develops loss-rate statistics on the basis of the amounts collected over the life of the financial assets rather than using separate probability of default and loss given default statistics. The Fund then adjusts these historical credit loss trends for current conditions and expectations about the future. The loss rates are based on groupings of various customer segments with similar loss patterns (i.e., by building location). The calculation reflects a simple average of all loss rates per period, reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. The Fund uses an overlay of measuring and forecasting the level of defaults. Generally, trade receivables are written-off if past due for more than one year and are not subject to enforcement activity. The Fund does not hold collateral as security. Staff advances have been considered insignificant and as such no ECLs have been computed.


40. Financial risk management (continued)c) Credit risk (continued)

The maximum exposure to credit risk on trade and other receivables at the reporting date is the carrying amounts of the financial assets disclosed below;

2021UGX 000

2020UGX 000

Trade receivables 4,543,993 4,378,422Dividends receivable 36,111,526 31,377,835Other receivables 22,085,857 1,316,514

62,741,376 37,072,771

Set out below is the information about the credit risk exposure on the Fund’s trade and other receivables using a single loss rate approach as at 30 June:

2021Gross receivable

UGX’ 000 loss ratesECL

UGX’ 000 Carrying amount

Trade receivables* 8,788,036 48% (4,244,043) 4,543,993Contributions receivable 1,879,494 100% (1,879,494) –Dividends receivable 37,004,566 2% (893,040) 36,111,526Other receivables 30,221,289 27% (8,135,432) 22,085,857

77,893,385 (15,152,009) 62,741,376

2020Gross receivable

UGX’ 000 Loss ratesECL

UGX’ 000 Carrying amount

Trade receivables* 8,015,701 45% (3,637,279) 4,378,422Contributions receivable 1,879,493 100% (1,879,493) –Dividends receivable 36,464,911 14% (5,087,076) 31,377,835Other receivables 4,091,599 68% (2,775,085) 1,316,514

50,451,704 (13,378,933) 37,072,771

Movements in the allowance have been disclosed in Note 17.

*Set out below is the information about the credit risk exposure on the Fund’s trade receivables based on the customer segment i.e. building location using a single loss rate approach as at 30 June 2021 and 2020:

30 June 2021Gross receivable


UGX’ 000Carrying amount

UGX’ 000

Workers House 1,530,474 50% (771,145) 759,329Social Security House 6,057,897 50% (3,011,927) 3,045,970Yusuf Lule parking 592,890 72% (429,335) 163,555Naguru-Muvule 54,844 33% (17,937) 36,907Jinja City House 50,485 3% (1,268) 49,217Bwebajja 435,000 3% (11,969) 423,031Mbarara 66,446 1% (462) 65,984

8,788,036 (4,244,043) 4,543,993

30 June 2020Gross receivable


UGX’ 000Carrying amount

UGX’ 000

Workers House 2,217,836 35% (772,013) 1,445,823Social Security House 4,711,338 51% (2,410,962) 2,300,376Yusuf Lule parking 600,633 63% (376,170) 224,463Naguru-Muvule 208,134 35% (72,687) 135,447Jinja City House 43,180 2% (756) 42,424Bwebajja 234,580 2% (4,691) 229,889

8,015,701 (3,637,279) 4,378,422

Movements in the allowance have been disclosed in Note 17.


40. Financial risk management (continued)d) Categories of financial assets and financial liabilities

Set out below, is an overview of financial assets and financial liabilities held by the Fund as at 30 June:

FINANCIAL ASSETS2021

UGX 0002020

UGX 000

Financial assets at fair valueEquity securities externally managed 104,109,596 87,662,482Equity investments internally managed 1,899,950,381 1,463,176,697Total financial assets at fair value 2,004,059,977 1,550,839,179

Financial instruments at amortised costCash and bank balances 80,835,813 26,022,095Deposits with commercial banks 204,709,471 203,157,273Trade and other receivables 62,741,377 37,072,771Debt instruments at amortised cost 11,556,221,300 10,016,837,661Loans and advances 11,704,035 15,382,874Total financial assets at amortised cost 11,916,211,996 10,298,472,674Total financial assets 13,920,271,973 11,849,311,853

Total current 2,350,630,589 2,591,500,671Total non-current 11,569,641,384 9,257,811,182

13,920,271,973 11,849,311,853FINANCIAL LIABILITIESFinancial liabilities at amortised costOther payables 87,159,107 54,729,023Total financial liabilities 87,159,107 54,729,023

Total current 83,697,216 51,381,675Total non-current 3,461,889 3,347,348

87,159,107 54,729,023

All financial liabilities have carrying amounts that approximate their fair values.

e) Capital management

The primary source of funding used by NSSF is member contributions and income from investments. The capital requirements are routinely forecast on a periodic basis and assessed against both the forecast available capital and the expected internal rate of return, including risk and sensitivity analyses. The process is ultimately subject to approval by the Board. There have been no significant changes in the Fund’s capital management policies and processes and capital structure during the past year and previous year. An important aspect of the Fund’s overall capital management process is the setting of target risk and inflation adjusted rates of return, which are aligned to performance objectives and ensure that the Fund is focused on the creation of value for the members. The Fund’s approach to managing capital involves managing assets, liabilities and risks in a coordinated way, and taking appropriate actions that will provide the target return in light of changes in economic conditions and risk characteristics.

The Fund seeks to optimise the structure and investment of capital to ensure that it consistently maximises returns to its members within an acceptable risk appetite. The NSSF Act provides that members must be provided with a minimum return of at least 2.5%. An interest rate of 12.15% was declared for the year 2021 (2020: 10.75%).

41. Fair value measurement

Fair values of cash and deposits with commercial banks, trade receivables, loans and advances and other payables reasonably approximate their carrying amounts largely due to the short-term maturities of these instruments and/or because they carry interest rates that reasonably approximate market rates.

The carrying amounts of equity securities are the same as their fair values since the instruments are presented at fair value.


41. Financial risk management (continued)e) Capital management (continued)

The financial instruments whose fair values differ from the carrying amounts as shown in the statement of net assets available for benefits are analysed as follows:

30 June 2021 30 June 2020

Carrying amountUGX 000

Fair ValueUGX 000

Carrying amountUGX 000

Fair ValueUGX 000

Debt instruments at amortised cost 11,556,221,300 12,365,750,932 10,016,837,661 10,610,820,495

Valuation techniques

Description of valuation techniques used and key inputs to valuation for investment properties and capital work in progress are disclosed under Notes 24 and 25 respectively, and below for debt instruments at amortised cost/held to maturity investments (Government debt securities and Corporate bonds) and investments at fair value:

Government debt securities: – Government debt securities are bonds issued by sovereign governments i.e Uganda, Kenya, Tanzania, Rwanda. Valuation techniques based on observable inputs resulting in a Level 2 classification.

Other debt securities: – Most of these instruments are standard fixed rate securities made up of mainly corporate bonds. The fund uses active market prices when available, or other observable inputs in discounted cash flow models to estimate the corresponding fair value. Corporate bonds are generally Level 2 instruments where usually there is no sufficient third-party trading data to justify Level 1 classification. The corporate bonds held by the fund have sufficient third-party trading and have, therefore, been considered Level 1.

Equity instruments: -The majority of equity instruments are actively traded on public stock exchanges with readily available active prices on a regular basis. Such instruments are classified as Level 1. Equity instruments in non-listed entities including investment in private equity funds are initially recognised at transaction price and re-measured (to the extent information is available) and valued on a case-by-case and classified as Level 3. The Fund’s holdings in Housing Finance bank Uganda Limited, Umeme Limited, TPS Uganda Limited and Yield Fund are all fair valued using level 3 inputs.

The following table provides the fair value measurement hierarchy of the Fund’s assets measured at fair value or those for which fair value is disclosed:

As at 30 June 2021Total

UGX 000

Fair value measurement using

Quoted pricein active market

UGX 000

Significantobservable

inputs(Level 2)UGX 000

Significantunobservable

inputs(Level 3)UGX 000

Asset typeEquity investments internally managed (Note 20) 1,899,950,381 1,744,167,745 – 155,782,636Equity securities externally managed (Note 18) 104,109,596 104,109,596 – –Investment Properties (Note 25) 852,506,254 – – 852,506,254Investment in associates (Note 22) 374,073,633 – 235,030,493 139,043,140Debt instruments at amortised cost 11,556,221,300 – 11,556,221,300 –

There have been no transfers between the levels during the period.


41. Fair value measurement (continued)

As at 30 June 2020Total

UGX 000

Fair value measurement using

Quoted price in active market

UGX 000

Significantobservable

input(Level 2)UGX 000

Significantunobservable

input(Level 3)UGX 000

Asset typeEquity investments internally managed (Note 20) 1,463,176,697 1,324,045,041 - 139,131,656Equity securities externally managed (Note 18) 87,662,482 87,662,482 - -Investment Properties (Note 25) 725,470,447 - - 725,470,447Investment in associates (Note 22) 361,245,165 - 232,169,135 129,076,030Debt instruments at amortised cost 10,610,820,495 - 10,610,820,495 -

Level 3 reconciliation

The following table shows a reconciliation of all movements in the fair value of items categorised within Level 3 between the beginning and the end of the reporting period:

Investment propertiesUGX 000

2021At 1 July 2020 725,470,447Total gains in surplus or deficit 69,784,516Additions 81,245,342Disposals 635,000Reclassifications (23,359,051)At 30 June 2021 852,506,254

2019At 1 July 2019 635,472,187Effects of adoption of IFRS 16 730,000Total gains in surplus or deficit 46,929,148Additions 58,106,422Reclassifications (16,253,550)At 30 June 2020 725,470,447

Description Input Sensitivity used*Effect on the Fair value

UGX 000

Workers house and social security house

Estimated rental value 2021: 10% 17,627,0002020: 10% 17,627,000

Estimated rental expenditure 2021:10% 6,365,0002020:10% 6,365,000

Vacancy factor 2021:1% 1,760,0002020:1% 6,365,000

Discount factor 2021:1% 11,980,0002020:1% 11,980,000

Sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 30 June 2021 and 30 June 2020 are as shown below:

* The sensitivity analysis refers to a percentage amount added or deducted from the input and the effect this has on the fair value.


41. Fair value measurement (continued)

No sensitivity analysis was done for the other properties and finance leases as these were revalued using the sales comparison/market approach which was considered to be the most appropriate to determine the fair values of the properties that were mainly composed of vacant land, residential properties, and unoccupied buildings with no establishments to warrant use of other methods with varying inputs.

42. Establishment

The Fund was established in Uganda under Section 2 of the NSSF Act (Cap 222).

43. Subsequent events

Refer to Note 44 regarding the Covid-19 pandemic.

There were no other material events occurring after the reporting date which had an impact on the financial position or results of the Fund.

44. Covid-19 pandemic

The novel Coronavirus 2019 (Covid-19) poses a significant threat to global health and the World Health Organisation has officially characterised the situation as a pandemic.

The Directors have assessed the impact of Covid-19 and also reviewed the measures undertaken by the Government of Uganda to mitigate the spread of the pandemic. Based on this assessment, the Directors are of the view that the pandemic will not have a material impact on the Fund’s operations, financial performance and going concern status.

45. Effects of prior period adjustments

During the year, the Fund made changes to the recognition and presentation of transactions and balances related to net dealings with members, interest allocation for the year and members’ funds in order to align to the requirements of IAS 26: Accounting for retirement benefit plans.

These changes, which have been recognised as prior period adjustments, had no effect on net assets available for benefits (comprised of members’ liabilities and net assets) as at 30 June 2020 or 2019 with the only impact being a reclassification of members’ funds totalling UGX 13,136 million from net assets to member liabilities.

The changes made to the statement of changes in net assets available for benefits had no impact on the net increase in the fund reported in the prior year except for interest transfer to members of UGX 1,154 million which is now exclusively recognised in members’ funds.

Changes made to recognise net dealings with members of UGX 775 million and the share of other comprehensive income of associates of UGX 8,374 million did not impact the net increase in scheme funds with those amounts only being reclassified and presented within Surplus before income tax.

In addition to the above changes, the Fund made reclassifications from capital work in progress to inventories and from investment properties to property, plant and equipment as disclosed in the respective notes.


APPENDIXFinancial Definitions

Total Revenue (UGX) Income generated from various investment activities associated with the main operations of the Fund and shown before any costs or expenses are deducted.

Realised Revenue (UGX) Profits or income from completed transactions.

Unrealised Revenue (UGX) Profits or Income occurring on paper, but the relevant transactions not yet completed. Also called paper profit or paper Income, because it is recorded on paper but has not actually been realised. It includes gains on; Revaluation, Equity Investments and Foreign Exchange.

Cost of Administration Total Operating costs / expenses, associated with company management, direction, policy or business activities / Operations.

Accumulated Members’ Funds Total Amount of money collected over a period of time from employees and other contributors in the private sector plus interest credited to members over time.

Interest to Members Amount credited to members accounts based on the income earned from various investments.

Asset Growth Movement in Total Assets.

Return on Average Investment (%) Gain generated on an investment relative to the amount of money invested.

Cost Income Ratio (%) Total Operating Costs expressed as a percentage of Total Income.

Return on Member’s Fund ( %) Gain generated in the period expressed as a percentage of Member Fund balance.

Compliance Level (%) Active members contributing consistently as a percentage of total active members.

Strategic Assets Allocation A portfolio strategy that involves setting target allocations for various asset classes and re-balancing periodically.

Dividend Income A distribution of a portion of a company’s earnings, decided by the board of directors, paid to a class of its shareholders.

OUR ANCILLARY INFORMATION

Share of Results/ Profits from Associate/Fair Value Gain on AssociatesA portion, allocation or share of Investee company profits in which the Fund owns a significant portion of voting shares (20 - 50%).

Fair Value The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Investment Portfolio A compilation of Investment assets designed to achieve a specific investment objective based on parameters such as risk tolerance, time horizon, asset preference, and liquidity needs with a potential to achieve the desired returns, while minimizing risk and volatility through proper diversification and balance.

Fixed Income Portfolio Assets or securities in an Investment portfolio paying regular income in the form of coupon, interest and principal at maturity.

Equity Portfolio Stock or any other security in an investment portfolio representing an ownership interest in Investee companies.

Real Estate Portfolio Physical Securities and Assets in Investment portfolio purchased, owned, sold, managed for rental income for a profit.

Convexity Convexity is a measure of the degree of the curve, in the relationship between bond prices and bond yields. It demonstrates how the duration of a bond changes as the interest rate changes. We use it as a risk-management tool, to measure and manage out portfolio’s exposure to interest rate risk.

Sharpe Ratio Sharpe Ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. Subtracting the risk-free rate from the mean return allows us to better isolate the profits associated with risk-taking activities. The greater the value of the Sharpe ratio, the more attractive the risk-adjusted return.

Discontinued OperationsThis relates to operations that were ceased during the financial year due to disposal or cessation.

Fund ReservesFund Reserves relate to accumulated special contributions received in accordance with Section 13 (1) and Section 14 (1) of the National Social Security Fund Act, (Cap 222).


LIST OF ACRONYMSACCA Association of Chartered

Certified AccountantsADA Advanced Digital ArchivalAMM Annual Members’ MeetingARC Audit and Risk Assurance

CommitteeBA. Bachelor of ArtsBn. BillionBRITAM British-American Investments

CompanyBSc. Bachelor of SciencesBUBU Buy Uganda Build Uganda CAGR Compound Annual Growth

RateCBD Central Business DistrictCBK Central Bank of KenyaCBR Central Bank of RwandaCCW Customer Connect WeekCOFTU Central Organisation of Free

Trade UnionsCMA Capital Markets Authority CMP Crisis Management PlanCSA Control Self-AssessmentCSR Corporate Social

ResponsibilityDRP Disaster Recovery PlanDSE Dar-Es-Salam Stock ExchangeDFCU Development Finance

Company of Uganda Bank LtdEABL East African Breweries LimitedECASSA East and Central African Social

Security AssociationEIA Environmental Impact

Assessment ERM Enterprise Risk ManagementExCo Executive CommitteeFCCA Fellow of the Chartered

Certified AccountantsFiRe Financial ReportingFL Financial LiteracyFx Foreign ExchangeFY Financial YearFUE Federation of Ugandan

EmployersGRI Global Reporting Initiative

HR Human ResourcesIAS International Accounting

StandardsIASB International Accounting

Standards Board ICPAU Institute of Certified Public

Accountants of UgandaIFRS International Financial

Reporting Standards

ILO International Labour Organisation

IPM Investment and Project Monitoring Committee

ISSA International Social Security Association

IMF International Monetary FundInfo InformationIT Information TechnologyIVR Interactive Voice Response K ThousandKAVC Kampala Amateur Volleyball KCCA Kampala Capital City Authority

Key Performance IndicatorKES Kenyan ShillingKPI Key Performance IndicatorKshs. Kenyan ShillingLAPSNET Legal Aid Providers Network M MillionMBA Masters Degree in Business

AdministrationMDF Medium Density Fibreboard MoFPED Ministry of Finance, Planning

and Economic DevelopmentMOH Minister of HealthMSc. Masters Degree in ScienceMSCI Morgan Stanley Capital

InternationalNEMA National Environmental

Management AuthorityNIRA National Identification and

Registration AuthorityNIC National Insurance

CorporationNOTU National Organisation of Trade

UnionsNSE Nairobi Stock ExchangeNSSF National Social Security Fund

OECD The Organisation for Economic Co-operation and Development

PAS Pension Administration System

PBI Performance-Based Increment PPDA Public Procurement and

Disposal of Public Assets Authority

PDL Premier Developments LimitedPRAU Public Relations Association

of UgandaRAF Risk Appetite FrameworkRwf. Rwandese FrancRd. Road

RMPP Risk Management Policy and Procedures

RSE Rwanda Stock ExchangeSAA Strategic Asset AllocationSACCOS Savings and credit cooperative

servicesSACA Staff Administration and

Corporate Affairs CommitteeSDG Sustainable Development

GoalsSBU Stanbic Bank UgandaSOPs Standard Operating

ProceduresSTP Straight through processTAT Turnaround timeTBN Transformation Business

Network TBL Tanzania Breweries LimitedTWIGA Tanzania Portland Cement

Company Limited Tz. Tanzanian ShillingUBTS Uganda Blood Transfusion

Services UCL Uganda Clays Limited UI User interfaceUK United KingdomURA Uganda Revenue AuthorityUSST Unstructured Supplementary

Service Data URBRA Uganda Retirement Benefits

Regulatory AuthorityURSB Uganda Registration Services

BureauUSE Uganda Securities ExchangeUShs. Uganda ShillingUSSD Unstructured Supplementary

Service DataUX User experienceVPDL Victoria Properties

Development LimitedWHT Witholding TaxYTD Year to DateY/Y. Year on Year

“The sky’s the limit when we invest responsibly”NSSF Commercial Projects

Documents

AUDITED FINANCIAL STATEMENTS 2021